In a recent article on Tony Blair, George Eaton wrote:
“[Blair] said of Corbyn’s supporters: “It’s clear they can take over a political party. What’s not clear to me is whether they can take over a country.” It was Blair’s insufficient devotion to the former task that enabled the revival of the left. As Alastair Campbell recently acknowledged: “We failed to develop talent, failed to cement organisational and cultural change in the party and failed to secure our legacy.” Rather than effecting a permanent realignment, as the right of the party hoped and the left feared, New Labour failed to outlive its creators.”
I beg to differ. The rise of Jeremy Corbyn is not a result of Blair failing to “cement .. cultural change in the party”. It is a result of the financial crisis, of everything that has followed from that, and the centre’s failure to offer a radical response to that momentous event.
Echos of the financial crisis are everywhere for those that care to listen. Even in the EU referendum, which at first sight is about free trade areas and sovereignty. The main reason Brexit has such wide popular support is concern over immigration, and that in turn is driven by a belief that immigration reduces real wages and puts pressure on public services. Yet the main reason public services are under pressure is austerity, which in turn was a reaction to the financial crisis. Immigration improves the public finances. The main reason for the decline in real take home pay for the low paid is not immigration but stagnant productivity following the financial crisis (and increasingly austerity measures).
The financial crisis was a major event not just in its consequences, but because it raised crucial questions about our current economic system. For most on the political right that question was too threatening to contemplate, so they doubled down by reducing the size of the state using deficit deceit as a means. But as many people did not want less spent on the things the state does, and a smaller state did nothing to immediately inspire the private sector, that only intensified popular frustration with the economic status quo.
Rescuing the banks should have been a prelude to radical reform of the financial sector, yet the centre only seemed to be concerned with putting the pieces back together again and making minor changes that are very vulnerable to being unravelled by political pressure from the banks. In many countries the centre seems paralysed by the glare of populism, whether that populism is used by governments (austerity) or the far right.
For the UK’s centre-left this paralysis comes in a particular form called ‘electability’. Radical policies almost by definition upset the status quo, who will attempt to frame such policies as anti-business or anti-aspiration. If electability becomes synonymous with avoiding anything that might be framed in this way, that rules out radical solutions. Yet radical events or profound changes in society and the economy may well require radical solutions, and if the centre avoids them they let people like Donald Trump or Boris Johnson in.
In a recent article Dani Rodrik wrote about populist politics in response to the impact of inequality and globalisation, but it could equally apply to the financial crisis. The two are connected of course: it was the globalisation of finance rather than anything happening in the UK economy that destroyed UK banks.
“The appeal of populists is that they give voice to the anger of the excluded. They offer a grand narrative as well as concrete, if misleading and often dangerous, solutions. Mainstream politicians will not regain lost ground until they, too, offer serious solutions that provide room for hope. They should no longer hide behind technology or unstoppable globalization, and they must be willing to be bold and entertain large-scale reforms in the way the domestic and global economy are run.”