Labour’s new and indispensable opportunity

By Ashley Walsh

It is a longstanding tension across Labour’s right and left that the party has been unable to build a comfortable relationship with finance capital and the free market. Linked closely to this has been the debate over how redistributionary the party’s macroeconomic policy might be – if at all – to create opportunity for millions of ordinary families. Chastened by the experience of the 1980s and the demise of the European social-democratic consensus, Labour embraced with electoral success light regulation and the supply side in a globalising economy.

Though it resulted in sustained prosperity from the mid-1990s, the global consensus of minimal intervention has come into question. The housing shock of 2008-9, the unpredicted banking crash, the global recession, not to mention extremely unpredictable current destabilisations in global markets: these explain why an American President took the political risk of heavier regulations on Wall Street, and why Nicolas Sarkozy and Angela Merkel mooted a financial transactions tax.

In Britain this trend has been especially pronounced. The banking crash, parliamentary expenses, and recent riots have brought right-wing figures to reconsider their position. Former Daily Telegraph editor Charles Moore penned an article indicating that ‘the left might actually be right’, questioning key tenets of popular capitalism. Peter Oborne’s commentary developed a moralised critique of free-market capitalism, condemning the ‘feral rich’ in our society and those in positions of power for setting so poor an example for the rioters.

Even Douglas Carswell MP, counted among the more right-wing of the Conservative intake, joined the trend by saying that ‘the free market all too often turns out not to be a free market at all, but a corporatist racket for the few.’ While the Daily Mail’s Dominic Sandbrook has condemned popular capitalism for failing to deliver on the promise of popular opportunity, we cannot forget Warren Buffet famously demanding that the US government increase his taxes.

New Labour’s commitment to the supply side, fiscal credibility, and the benefits of the free market were indeed sound: they resulted in unprecedented electoral success after all. Yet there appears to have been a substantial shift in our collective understanding of the global economy which in Britain has connected to questions of society and politics: responsibility, personal and professional morality, and mutual solidarity have become intriguing for even the right.

This presents a huge opportunity for Ed Miliband. By developing so profound a voice on the activities of certain employees in News International, and by providing a reflective analysis of the riots, Miliband has begun to answer these new questions. This may set Labour on the path to becoming those things that every supporter wants it to be: our economy’s conscience, our society’s moral voice, and the good guys of our politics.

Miliband should fully develop this opportunity. His overtures of responsibility in the board room and the benefits system and of morality from those in positions of political and societal influence are resonating. He should return the party to being the voice of popular opportunity, as it was in 1997, 1964 and 1945. He can develop this using the Living Wage, the universities policy and crucially fiscal policy.

As the contours of our politics evolve, Miliband can set the agenda to the coalition, provide common purpose for members both left and right, and present an optimistic yet sensible message.