Labour is pausing for breath, while it looks again at the balance of market and state

By Anthony Painter and Ali Moussavi

David Cameron is fond of saying “we can’t go on like this”. And he’s right. We can’t. The recession has exposed the risk that we face as an economy – and society – exposed to the full force of global financial markets. Particular communities have faced these risks continually. What has happened in the last two years is that we have realised that none of us are immune.

Thatcherism ultimately fell as a political force because it was unable to reconcile the convulsive impact of economic liberalism with the steadying hand of conservatism. When industries are wiped out in the blink of an eye communities and family life are torn asunder. The state has to expand as a result – what else can it do? That is why free markets and a strong state pedal in tandem.

The Iron Lady herself eventually remembered her Edmund Burke but by then her grip on power had already been fatally loosened. Her speech to the Scottish Conservative Party conference in 1990 extolling the virtues of a ‘nation of communities’ felt like a rare flash of a sense of humour, with so many communities flattened by the full force of the Thatcherite notion of the market.

New Labour’s response was to mitigate the most negative effects of the liberal economy through the minimum wage, tax credits, improved workers’ rights, all the while preparing workers for the market-place and providing the security of strong public services. As a response to the challenges posed by the free market is was more comprehensive, more coherent, and more humane.

However, all around the world, the left’s policy successes were coupled with a broader shortcoming – they over promised and under-delivered. The optimistic language of third way politicians like Blair and Clinton in essence promised voters that globalisation was nothing to fear, that the state could retrain workers, and educate them to compete in an international market place: ‘”don’t worry guys, the rules of the game have changed, but we’ll teach you how to play it.” For too many, it didn’t work that way.

Ultimately, the central contradiction between the tornado of the global free market and the fragile bonds of community eventually resolved in favour of the former. Labour’s response to the economic crisis has been absolutely right: the financial system was prevented from meltdown, unemployment was mitigated, and while the real economy suffered, it didn’t collapse. That was fire fighting. Now the really difficult work begins.

As Liam Byrne has observed in the arena of public service reform:

“The bottom line is this. If you want a strong society, you need a fair society. And fair societies have a strong state.”

The same might be said of relations between the state and the market: communities, families and societies need some sheltering from the full force of the market. This can only happen with a state that exists in an international order that accepts the legitimacy of protecting social interests. While the form will be vastly different, it is time to revisit some of the thinking behind the so-called ‘embedded liberalism’ post-war era – because social life depends on a greater degree of stability than the pure free market can offer.

It is little wonder that we have become anxious as a society, see discord and feel insecure in the face of change and perceived change around us. A Times poll finds that 70% see society as “broken”. 64% see a Britain on the wrong track. 82% think it’s “time for a change”. Faith in our political institutions is frighteningly low – and this was occurring before the expenses scandal.

Yet we know that society isn’t “broken”. As the Economist reports, we have seen a decade and a half of falls of crime, violent, and murder; the rate of teenage pregnancy is no more now than 30 years ago; and we drink more – or at least a minority drink substantially more – and smoke less. So why do we think differently? As the Economist – the bastion of the global liberal outlook – states, the media and politicians are partly to blame. But there’s something else going on, too. A generalised feeling of insecurity is conditioning our view of the world. Of course, much of this insecurity is not just perceived; it is real.

What David Cameron has learnt to do very effectively is tap into this discontent. That’s not difficult to do in opposition. The problem is that while he can do a good line in “I feel your anger”, he doesn’t have either the ideas or the policies to do a jot about it. His problem is that Cameronism is a footballers’ mansion built on a fault-line.

He is pitching for the focus grouped centre while the significant right of the party is engaged in an early ‘no surrender’ warning. The provisional wing of Thatcherism – exemplified by Fraser Nelson in the recent Keith Joseph Memorial lecture – is digging its heals in. Minimise the state, slash welfare, and unleash incentives through inequality and, hey presto, the good society magically appears.

Now, David Cameron, despite the occasional flirtation, has at least a degree of scepticism about this, though his conference speech will always make us wonder. What we do know is that he doesn’t have any convincing response to the insecurity that he has both identified and does his best to stoke even further.

The problem is that no showdown has taken place and regardless of what Cameron thinks about society, he still thinks the state is a big problem.

Political parties have primal instincts. They try to underplay them to get into power; they try to cloak them to stay in power. We know that the Tories have resorted to tactics in the short-term. The problem is that we don’t know how these tactics relate to their broader governing strategy, or even if there is one. Who is the true David Cameron and where does his heart lie?

Radical localism and the post-bureaucratic state is an expedient attempt to negotiate a common cause between Red Tories (OK, the Red Tory), Tory progressives, and neo-Thatcherites. This may hide the fissures but eventually they will open up: the role of the state, the response to inequality, compassion, the size of the state, and the means of funding it are all fundamental conflicts that are waiting to emerge.

None of these forces have a convincing response to the fundamental sense of social dislocation felt by many – most – Britons. Thatcherism let global economic forces loose. Blairism was an attempt to come to terms with them; to mitigate their impact while harnessing their benefits. Both approaches ultimately unraveled.

Labour is pausing for breath as it asks questions about the balance of state and market again while simultaneously manning the galleon. Interesting angles are beginning to emerge from the likes of Jon Cruddas, who is finding a different language of the left:

“Labour, because it was captured by the focus group, has lost that ethic of community, responsibility, obligation.”

Though we have to declare an interest (as we are associated with Demos’ Open Left project – though we write here in a personal capacity), it is also worth pointing to James Purnell’s recent piece in The Guardian. But Cameron – though he has commandeered the rhetoric of social breakdown and political crisis – offers little by way of real solutions. He’s setting himself up for a fall. It is difficult to see how Cameronism could succeed where other attempts to marry the free market and the stable society have fallen short.

The good news from The Times poll is that Britons remain optimistic about the future. David Cameron is an optimistic character, too. So he says.

Unfortunately, optimism is not enough when you want to be Prime Minister. You also need vision and leadership. On this score, his attempt to navigate his party’s ideological divisions fall far short of what is needed to reassure insecure Britain.