New Labour’s greatest domestic failure was to fail to change the political terms of trade in Britain and end the dominance of capital over labour caused by Margaret Thatcher’s war on the trade unions. Indeed, when Mrs Thatcher died, Tony Blair said of her trade union reforms, “I always thought my job was to build on some of things she had done rather than reverse them”.
As Prime Minister, Blair also failed to restrict the overweening power of employers and huge corporations. This was a huge wasted opportunity. When the Conservatives returned to government, they destroyed Labour’s undoubtedly beneficial legacy of spending on the NHS, improved social housing standards, SureStart, EMA, and more by simply defunding our policies, claiming it was necessary for the pursuit of austerity. They then continued Mrs Thatcher’s work on further skewing the relationship between labour and capital, most notably through the 2016 Trade Union Act. In just a few short years, it was as though we had never been in government.
In our just published book, The New Serfdom, we expose how the ideas of Friedrich Hayek, an Austrian economist, have shaped the past forty years in Britain. Margaret Thatcher considered him her guru and in 1975, when she became leader of the Conservative Party, she set about turning his ideas into reality. Hayek and Mrs Thatcher believed in a smaller state, lower taxes, little in the way of redistribution, fewer worker rights, fettering the trade unions, and letting the ‘free market’ rip, with no regard for the consequences.
Hayek’s advocates successfully sold three extraordinary lies. The first lie is that the ‘free market’ is always and everywhere correct, infallible and superior to any other choice mechanism. The second is that markets perform best when those who operate within them display ‘self-regarding materialism’, which is a posh way of saying ‘greed’. The third big lie is that inequality incentivises those with less to work harder, and is therefore a good thing. So, if you’re rich you need to get paid loads and have more so that you work hard, but if you’re poor you need to get less so that you work hard – an enormous contradiction.
Taken together, implementing policies based on these three lies has caused the wealth and opportunity afforded to the one per cent race ahead of the rest. Social mobility has slowed to a virtual halt. There has been an inexorable rise in inequality, which has damaged our social solidarity and our physical and mental health. Growing rates of mental illness among young people, a huge rise in loneliness in our atomised society, two subjects we explore in depth in our book. And despite the Conservatives’ claim that this was all necessary for a strong economy, forty years into this experiment, we have an economy which has low growth, low productivity, low wages, and is not delivering advances in standards of living.
This is a substantial part of the reason for the emergence of nihilistic, ‘tear-down-the-system’ populisms, from Trump to the animating forces behind Brexit. People are angry and they’re right to be angry.
When Angela was Shadow Business Secretary, she was asked by Jeremy Corbyn to resist the Conservative government’s Trade Union Bill. We had some successes despite the government majority, and a marker was set that we must not allow the squeeze on workers’ rights to continue. Jeremy Corbyn has said we would reverse some of the Thatcher-era reforms, which, as trade unionists, we agree is the right thing to do.
To succeed in the 21st century we will need to renew democratic socialist economics and politics to deal with the challenges of tomorrow: automation, artificial intelligence and algorithms replacing human endeavour. Many of the challenges we face such as catastrophic climate change and the shrinking of the tax base by global corporations, require cross border co-operation and international agreements to solve. To do this, the incrementalist philosophies that underpinned New Labour, in particular Anthony Giddens’ ‘Third Way’, have to be abandoned. They were too defensive, pessimistic and contained no serious challenge to the market fundamentalism that is now causing untold damage to our society and our world.
Instead we advocate looking to ideas such as rationalist philosopher Thomas Nagel’s social theory of taxes, which sees them as the membership fee for a good society. He argues we must switch to a universalist ethic, transcending our own ‘selfish’ subjective viewpoint, thereby providing the basis for empathetic and egalitarian action. Philosopher Martha Nussbaum argues compellingly for the incorporation of the insights of feminism, notably compassion and hope, in our politics.
To survive in this new world, we will need to find again our confidence to make moral choices in a legitimate democratic framework rather than outsourcing them to amoral market mechanisms. And we will need to defend the Enlightenment values of reason, knowledge, facts – as well as completing the Enlightenment to bring about true equality.
The New Serfdom has come about over a long period of time. But it can be overcome and replaced by a more equal caring and fulfilling alternative which works for all of society rather than just the privileged few. It is only a democratic socialist Labour Party determined to break with a failed economic consensus that could ever bring about that change.
Angela Eagle is MP for Wallasey and Imran Ahmed is a political adviser.
The New Serfdom (Biteback Publishing) is out today, available to buy at Amazon, Waterstones and other book retailers.