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.
4 thoughts on “Labour the Red Tories? Don’t talk rubbish!”
Great points Mr Gow.
Is it social democracy that is in retreat or society? Is it in retreat because of the collapse of globalisation?
The dream of bringing people together through prosperity had been exploited by financial market engineering for excessive profits. Globalisation fails and leaves a gap. The retrenchment to the right and nationalism is a natural movement by people asking “what now”… if globalisation fails and working together isn’t making me better off, I am going to look after myself.
This discussion about “Red Tories” is an example of a lack of creativity in the left yet I bet they totally agree with the notion that austerity, as part of the structural decline of financial markets based globalisation, is socially reductive (and dangerous).
Could the Left restate a confident vision of capitalism with a consumer led economy rather than a financial markets based economy (that was bred by Gordon Brown)?
If we convince the cash rich corporates that they will do better when the consumer does much better, then we can make the argument that Corporation Tax should not be a race to the bottom, consumer laws should be strengthened to take out predatory capitalists and low pay will only weaken the ability for consumers to buy the products of the corporates.
For all of the above to happen, the state has to intervene on behalf of the consumer. Old Labour cannot rely on the “working” classes because the definition of “Workers” from a Union perspective has diversified hugely. So their important voice is not a majority working voice. Also does not take into account people who do not work like retired, stay at home carers, self employed, people choosing to bring up their children because they cannot afford child care.
But everyone who is old enough to vote is going to be a consumer and Labour and Social Democrats need to be on the side of consumers and let the Tories be on the side of the corporates.
Could that be the dividing line of left/right politics for contemporary times?
Surely the only constraints on gov spending are inflation/excessive currency devaluation? Tories have failed on their own deficit target, but it’s the wrong target. Who out there will promise full employment?
Thanks Fung, much better up here than in Highbury E!
It’s not just about consumers tho’ that’s important but about ending the grotesque theft of “surplus value” by a handful of land-owning rentiers and/or financial investors/bankers and/or industrialists from the huge majority of people.
Isn’t the langugae of ‘“surplus value” by a handful of land-owning rentiers and/or financial investors/bankers and/or industrialists from the huge majority of people’ going to isolate a great many people who do not see politics in those terms anymore?
Concentration of capital is a huge problem and national structures of economic management had failed to be able to respond in the era of globalisation. You cannot fight against global movements of capital for example and interest rates have converged for a long time in many countries who feel helpless to move them.
The problem has to be the race to the bottom in corporation tax placing a burden on society to fund it correctly. For example, companies benefit from all that investment made by the state and individual students to supply graduate skills to them. Yet the student and the state pay the bills. Why shouldn’t there be a graduate employer tax on comapnies who benefit from hiring them?
This Corporatism is ideological now with the Tories and a shift to fighting the election with the dividing line of consumer vs corporate interest would produce a whole loads of economic benefits to the people most likely to get the economy going: Consumers who spend.
The more they spend, the better the health of the corporate entity.
And lets face it, we are all consumers!
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