Labour’s future

By Diarmid Weir

The formation of the Conservative-Liberal Democrat coalition has now made Labour the last standard-bearer for practical left politics in Britain. If we can get clear in our collective head what distinctively left wing politics means, there is a huge electoral vacuum to be filled.

Ed Miliband has said that “while the New Labour combination of free markets plus redistribution got us a long way, it reached its limits some years ago.” The logic of this is that ‘helping the poor’ is not enough. “Compassionate” conservatism is as capable of doing this as social democracy. Indeed, in their acceptance of the imperative of profit-driven capitalism, there is nothing to choose between them.

The truly left-wing idea should be the realisation that when social groups become detached from society as a whole, either due to excessive wealth or due to an absence of it – either giving little benefit to society or receiving little from it – that neither have much concern for the needs or interests of the other. Yet the irreducible state of uncertainty and incomplete information in the world (as amply demonstrated by climate change and the financial crisis) makes this costly to everyone. The distinctive belief of the left must therefore be that equality is not just a moral or an ethical issue but, above all, a practical one.

What does this mean in practice? Politics must become a true market for policy, where we learn from each other as well as registering our own opinions. The political reform proposals put forward by the Conservative-Liberal Democrat coalition pay lip-service to this: tinkering with the voting system; regulation of lobbying and reviewing ‘big-money’ funding of political parties. Labour should embrace real change – moving to a voting system that gives true proportional representation in the ‘political market’ while prioritising voter power over party power.

In economics the great theoretical benefit of markets is that they transmit information about the demand for and supply of goods and services through the efficiency of the price mechanism. Our current economy fails to make the most of this theoretical benefit, for two main reasons.

Firstly, demand can only be expressed in the form of money. If money is in ‘short supply’ for whatever reason, real demand can remain unexpressed; if in ‘excess supply’ fictitious demand may rule the roost.

Secondly, supply and demand (especially for labour) are largely in the control of organisations whose structure is designed to streamline the interests of their monetary beneficiaries (corporate shareholders), and sideline the interests and experiences of all others.

The resultant power in the hands of the corporate sector (particularly the financial sector) has resulted in the crowding out of power from the democratic sphere. A truly left-wing politics would confront this problem head-on, and look for effective ways of reforming the monetary system to make it more responsive to human and social needs, and of re-casting corporate governance in a more pluralist mould.

We must move beyond the equalities of ‘outcome’ or of ‘opportunity’, and move toward a new concept of ‘equality of voice’ or ‘equality of process’ which acknowledges the vital importance of inclusivity in both political and economic decisions.