Labour the Red Tories? Don’t talk rubbish!

David Gow, former European Business Editor of The Guardian and a contributor to the 1975 Red Paper on Scotland, explodes a couple of myths about the Scottish Labour party, the Tories, and economic justice.

It’s time to nail two distinct but related myths – or lies if you prefer – doing the rounds of the Scottish chattering classes beyond the 45ers.

One is that Scottish Labour is “finished,” at the very least “in an existential crisis.” The other is that, by taking part in the Better Together pro-Union campaign with the Tories and Lib Dems, its members are “Red Tories” and it supports what Bella Caledonia calls an “austerity union.”

It is possible to argue that social democracy itself is in crisis in Europe (and I have done elsewhere) – and that applies equally to the soft left wing of the SNP or even the Scottish Greens as much as to Scottish Labour. The prolonged aftermath of the 2008 financial crisis has left a movement/ideology founded by such luminaries as Frank Podmore and Eduard Bernstein around 130 years ago floundering.

It’s not as if, however, the neo-liberal ideology espoused by the “Washington Consensus” remains in unchallenged ascendancy. Even the IMF’s Christine Lagarde and Goldman Sachs’ Lloyd Bankfein describe glaring inequality as economically destabilizing.

But what really sticks in the craw – of this lifelong anti-Tory at least – is the slur that Labour and Tory are identical, united in their policy response to the six-year-old crisis: austerity and yet more austerity is required to overcome the budget deficit/debt and “balance the books”, like Germany’s obsession with the “black zero.”

Austerity, we know, means severe cuts in current public spending, above all welfare benefits, stagnant or reduced living standards (supply-side or structural reforms) and a further redistribution of income and wealth to the already rich, including via a housing bubble (in London). In a nutshell, the poor pay for the crisis engendered by excessive greed among banks.

Austerity politics doesn’t work. Four-and-a-half years since he became chancellor, George Osborne, far from improving the public finances, has seen government borrowing soar to £58bn in the first half of this financial year and likely to exceed £100bn in the full year. This compares badly to the £86.6bn he set as his target in the budget.

And, surprise surprise, a prime reason for this deterioration is: low pay, including among the growing army of the impoverished self-employed, slashing tax receipts in its wake. If Mr Smug is to finance his and Dave’s plan for £7.2bn of tax-cuts in the next Parliament, they’ll have to cut spending by more than the further £25bn they’ve hinted as necessary – and take the axe to even more benefits, to the living standards of pensioners, to overseas aid, and to the NHS.

To suggest that Labour, north and south of the border, shares these nightmare and/or fantasy policy objectives is a gross untruth. And even Tory apologists underline the differences.

Our goals, inter alia, are to promote sustainable growth and well-paid jobs via investment by what Mariana Mazzucato calls “the entrepreneurial state”; to rebalance the economy towards manufacturing, build more affordable homes, spread the living wage, re-regulate/reform markets to make them work for consumers, reform land ownership and, yes, tax the rich.

Above all, Labour pledges to tackle the causes of and provide solutions to grotesquely high levels of inequality. (A brilliant new paper by Prof David Bell of Stirling University suggests this can better be done by raising benefits than by levying tax increases on the well-off but that’s for another time.)

“Ah but”, critics say, pointing to Ed Balls’s recent commitment to freezing child benefit in year 1 of a Labour government, “welfare cuts and austerity remain core elements of its economic policy”. It’s true that he would like to balance the budget by 2020 – rather than Osborne’s (unattainable) target of 2018. That may not be desirable, certainly for Labour activists, and, in any case, public finances will improve the more tax people earning decent incomes pay and the less money is wasted on corporate subsidies, a bloated managerial bureaucracy and white elephant projects such as Trident renewal.

However, reducing the deficit/debt is a worthwhile target if Labour’s investment plans for the real economy and proposals to reduce inequality are to be met – and even some credit rating agencies are convinced. Tory plans to increase social injustice are not only unacceptable but economically illiterate. So are the enduring claims by the Left Yes that one can deliver social justice in Scotland via increased welfare spending funded by tax rises and with no regard to budget deficits or financial markets or borrowing rates/debt yields. This version of economic la la land reminds me of the faith crusades I watched from the cliffs above Fife beaches in the 1950s. What’s more, 15 years of a Scottish Parliament has brought not a scintilla of redistribution to the poor.

In sum, it’s simply bad faith with Scottish voters to pretend that all it takes to bring in a social justice heaven on Caledonian earth is for all good (anti-Union) people to wish it.