Is Labour Ready for Another Economic Crisis?

Ellie Mae O'Hagan writes that the Tories are politically prepared for another economic crisis, should one hit. Looking at the lack of profitable opportunities for capital presently, the ongoing investment strike, stock markets that went up and then came down, and the inflating credit bubble you'd be daft to rule one out with certainty over the coming years.

Ellie talks about how she felt the left response the the crash(es) of 2008 were bland and complacent. My experience was different. I wrote at the time that there was a bit of energy and excitement about, even though we knew the government would strive to make a crisis of private capital into a question of public spending. For our part (I was a Socialist Party member up until early 2010) it was a spur for activity, of trying to raise questions about the crisis-ridden character of capitalism and get people to take our analysis seriously. Never mind that the SP's theory of crisis was premised on the underconsumption of the working class, and therefore was both wrong and owed more to Keynes than Marx, and that it had confidently predicted 15 out of the last three recessions, we felt we were right and that our ideas had been vindicated after 30 years of neoliberal consensus.

Ultimately, the far left in its manifestations weren't able to press home the political advantage of its cornering the niche for forecasting economic Armageddon, though I remember one international current pompously claiming The Graun echoed its own unreadable editorials. Dream on ...

The Labour Party was intellectually paralysed by the crash. Credit where credit is due, Gordon Brown overcame his predilection for dithering and moved decisively to prevent the meltdown of Britain's banking system. His rescue package became a model for elsewhere and helped stop the so-called 'Great Recession' from tipping over into an unwelcome retread of the Great Depression. But you got the sense this was all done rather reluctantly. Earlier in the year as Northern Rock courted liquidation, Alistair Darling appeared genuinely contrite that it had to be nationalised. And small wonder. As far as Labour under Blair and Brown had a political economy, it was one marked not just by market fundamentalism, but by the belief that it was the job of the state, as per Thatcher and Major before them, to create new opportunities for profit making and profit taking funded by the tax payer. None of this erases the positives of the last Labour government, but one cannot help noting these advances were tacked onto a core politics that, in all essentials, did not deviate from the script handed down from Thatcher to her successor.

When the crisis erupted, Labour was not ready for it. It had a narrative, that the crisis was caused by the collapse of the US housing market and how exotic (and toxic) forms of debt were held by British banks which, in turn, placed them in danger of failure. It wasn't our fault, guv. The problem was Labour had repeatedly told the City that it was fine and dandy, intensely relaxed some might say, with the financial alchemy driving the treasury tax take. With government seeing itself as facilitator of rather than regulator of economic activity, there was no position from which it could tell a story that exonerated its previous actions. It didn't matter that the Tories under Dave were committed to the same spending plans and had attacked Blair and Brown for regulating too much - the only oppositions the popular media scrutinise come from the left. And so the future PM and chancellor articulated a position as per Ellie's article, and we know what happened next.

Are we in a better position today? One of the few positives to come from Labour's loss back in 2010 is an opening up of debates around economics. Matters are a touch more heterodox now. Too late in the dying days of the Brown government, our beloved comrade Peter Mandelson talked about the need for the state to do industrial activism. Noted by his sometime admirer George Osborne, the Tories have talked a lot about this with their long-term economic plan and northern powerhouse nonsense, but it was only Labour that embedded it in their programme. Unfortunately, for a variety of reasons, the punters weren't takers. Now? Well, the position has moved further to the left. Austerity is rightly attacked as unnecessary, harmful, and damaging from the perspective of capital as well as the people at the sharp end. The book is closed on neoliberal policy as even standard bearers of the Progress right swap Friedman and Hayek for Keynes, and we have closeted and not-so-closeted Marxists taking up advisory roles to Labour leadership.

Despite these welcome changes, there is no indication this ferment is breaking news to people outside the strange little club of the politically interested and committed. We can talk about austerity and cuts, but the sad truth is it gets through to precious few. The Tories gambled that paring back public services and flogging off parts of the NHS without adversely affecting the majority of people, and their judgement has proven correct. Doubling down on criticising austerity isn't going to work, and neither will exposes of cronyism and serious tax dodging. Unfortunately, I'm not in the possession of an answer either, and if I were change is made by movements of masses of people - ideas only gain flesh if they inhabit the thoughts and actions of millions. Perhaps, just perhaps, the ideas around the basic/citizen's income could be the basis of a platform that will make people take note of what Labour is currently saying about the economy and the prospects of another crisis. Which is why, seeing as the economy clock could be counting down to a renewed round of ruination, it should be adopted as a matter of priority.