The Reverse March of Labour

Carl Rowlands interviews Bryan Gould:

Why did Labour lose in May? What aspects of the defeat were familiar from your own time in British politics?

I think Labour lost (setting aside technical issues like the restriction of the franchise) because they failed to offer an alternative view of how the economy should be run and in whose interests – which is the central question in current democratic politics.

They had no chance of convincing people that they could produce different and better outcomes, if they failed to signal a departure from Tory priorities – as in the case of committing to eliminate the deficit, as though it makes sense to isolate this relatively minor aspect of the UK’s economic problems and treat it as the top priority.

Almost all candidates in the Labour leadership contest have talked of the need to appeal to ‘wealth creators’ whilst enabling ‘aspiration’.

Back  in 1992 you referred to those ‘involved in wealth creation’ rather than simply ‘wealth creators’ – quite an important, if subtle difference.

Wouldn’t wealth creation include many who work in the public sector (for example, in universities) – in fact, anyone who creates anything?

In relation to socialist objectives, how can we move on from this to define a common wealth in 2015?

The keenness to talk about ‘aspirations’ is often short-hand for, ‘we need to pay more attention to middle class interests and be more like the Tories’.

I don't say we shouldn’t try to appeal to a wider range of opinion and interests, but that should not mean abandoning others. The goal should be to show that a different approach would meet the interests of most people.

The point you raise about ‘wealth creation’ illustrates this point. The current tendency is to accept that ‘wealth creators’ are the owners, employers and investors, while the contributions made by others are best regarded as production costs.

I think that all those involved in the productive sector, in whatever capacity, are ‘wealth creators’ and that they should be distinguished from those in the speculative sector – the financiers and rentiers – who make their money not by creating new wealth but by gouging it out of the rest of us.

The shame is that the unemployed are denied the chance to join the ranks of wealth creators.

In 1995 you described Labour's progression as follows:

‘It’s been a painful process of withdrawal from hope and idealism…. I think we have simply given up. I think we will secure power, but I don't think we’ll make much of it. As soon as the voters recover their confidence in the Tories we'll be removed, in order to make room for the real thing’.

Is this fairly accurate as an appraisal of the last Labour governments, and if so, what now?

I adhere to this view. If the best we can offer is that we will be ‘Tory-lite’, we can't be surprised if the voters prefer the real thing. Even if they don’t like Tory policies much, they are attracted by those whose hearts are really in it.

The left, for three or four decades, have too often believed in their heart of hearts that there is no alternative to neo-classical economics and they have therefore struggled to sound convincing when they say they can do better.

As the MP for Dagenham you were one of a handful of Labour MPs in southern seats in the 1980s.

After thirty years, Labour’s situation in the south is in some respects worse, with heavy attrition of membership and the breakdown of multiple smaller branches into sparsely populated Constituency Labour Parties (CLPs).

What can Labour do to win support from voters in the south in the future?

Labour too readily accepts that voters in the south are different, with the result that they either accept that those voters are beyond reach or believe that they have to be addressed differently.  That is not how I see it.

While voters in the south (which is just another way of describing the better-off middle class) are on average better off and have better jobs, services, etc., they have just as big a stake as anyone else in a successful economy that serves everybody's interests and in a society that is not fragmented or divided against itself.

I think it is too easy to assume that particular approaches have to be made to particular groups, such as ‘white working class voters’, when Labour's best approach is to assert that policies that will, in fact, benefit virtually everyone are the best way of looking after particular groups, including the disadvantaged.

And in any case, not every voter in the south is well off – there are many who will be sensitive to poorer public services, widening inequality and worsening job security.

The task for Labour, in other words, is not to develop many sets of policies that will meet as many specific interests as possible (thereby running the risk of confusing and embarrassingly inconsistent policy stances) but to provide an overall and persuasive analysis of what a successful economy and an integrated society would look like and of how to bring them about.

It’s a further illustration of Labour’s lack of confidence. The Tories are perfectly ready to proclaim that they are the party for the 'working man'. 

On the point about activism and membership, all parties face this problem. The Tories don’t worry about it, because they can use their advantages in financial resources and media support to communicate directly with the voters.

We need to be much quicker on our feet – taking up individual, local and short-lived issues that command public interest and showing how the correct responses to those issues are best arrived at by applying our overall set of values and view of how society should work.

People drawn in, even if only temporarily on a particular issue, will remember that experience on polling day.

You once described New Labour as a ‘soufflé of good intentions’. Do you think this incoherence remains an issue with Labour in 2015?

If so, what, if anything, can be done to provide a true, values-based ethos to Labour as a prospective party of government?

Yes, I still think this is true. Labour would like to do good things but is faced with the roadblock that they have no idea how to disengage from the current orthodoxy.

They are unwilling or unable to do the hard work needed to identify a better alternative and can’t conceive that there could be new thinking that is not going to be condemned as ‘left-wing extremism’.

Moving on to economics, you were very critical of the decision to make the Bank of England independent, and have consistently argued for a different approach to monetary supply.

To what extent do you think it is essential that the supply of credit is diversified?

This next question takes me to the heart of the problem.

Without a new approach to major issues like monetary policy and an understanding of its true purposes we can't develop an alternative economic strategy. We need to update Keynes (if that doesn’t sound too presumptuous) so as to fill a couple of lacunae in his analysis.

We need to ensure, for example, that monetary policy is not the exclusive domain of the banks and is not used solely to boost their profits rather than serve the public interest – and that’s why allowing the central bank to run it is such a bad idea.

If we want government to take responsibility for full employment, which should be the primary goal of economic policy, ministers should be accountable and not permitted to sub-contract their responsibility to the bank.

There’s been a bit of debate in some circles recently regarding the validity of full employment as a goal.

This is not to say that consigning people to a life on poverty-level benefits is acceptable, more that the goal of full employment is both too unspecific regarding under-employment (for example, zero-hour contracts) and also neglects the danger that the state will use coercion upon the unemployed to force them into workfare and other deflationary schemes.

As the founder of the Full Employment Forum, do you think that in the world of ‘Sports Direct’-type employment, full employment remains a valid goal?

Implicit within a lot of current criticism of full employment is that the state should offer Unconditional Basic Income….

I’m suspicious of the argument that full employment, however defined, is for some reason now unattainable, since it is so convenient for employers and others to retain a pool of unemployed.

Keynes and others had no difficulty in defining full employment as a condition where there are as many jobs as (or perhaps a few more than) there are people looking for work. I think we should be careful about what employment means for the purposes of this and any other definition.

A zero-hours contract is not in my view the equivalent of a job and nor is part-time work a job for someone wishing to work full-time. In New Zealand at present, even a one-hour working day is treated as a job and therefore as reducing the unemployment total.

As to how full employment is to be achieved, Keynes was interested in direct job creation so that the government or public sector would be the employer of last resort.

He saw this as the means of avoiding variable employment levels since even a high level of aggregate demand or GDP would not necessarily mean that effective demand (i.e. predictions as to future demand) would be high enough to persuade the private sector to employ everyone available for work.

I think the theoretical argument is accurate enough but the proposition is politically difficult (particularly for a public conditioned to believe that unemployment is the result of fecklessness!) and may not be practicable, in its pure form at any rate. Similar doubts of course apply to the notion of a ‘refusal of work’.

I do think, however, that something that would be recognised as full employment is attainable if we were to get the economy moving again by addressing our two main problems – a loss of competitiveness in the productive sector and the absence of proper financing for industry.

As a slightly separate point, I think there is considerable merit in a Universal Basic Income, both as an anti-poverty measure and a simplification of our complex benefits system and as a recognition that, as citizens, we are all entitled to share in at least the basic benefits of living in society.

I am quite clear that the rise and rise of house prices is huge driver of widening inequality.

A good illustration of the process is the recent announcement that a generous right-wing government in New Zealand will raise benefits for the poorest families by $25 per week, at a time when the owners of houses in Auckland have seen the value of their houses rise over the past year on average by $2000 dollars per week.

That rise in dollar value is entirely the result of irresponsible bank lending, and is not matched in any way by a rise in real output – it represents a transfer of resources from those who don't own their own homes to those who do.

One of the more controversial stances you took in the 1980s concerned employee share ownership, and encouraging this as a form of common ownership. Would you revise this stance, based upon developments since then?

If the profit motive is so vital and beneficial, why not extend it to the whole work force?

Employee share ownership, or something like it, would be a practical reflection of the fact that they are all wealth creators.

Anything that would make private companies more responsive to the wider interest would be helpful.

Over the space of the last five years, Labour has moved from defending investment to subscribing to a reduced version of Conservative spending cuts.

What are the political implications of this? Could it eventually lead to what is sometimes called the ‘Pasokification’ of Labour – its slow disappearance and fade to obscurity?

Is there a way for Labour to move beyond what could be permanent austerity, in the face of fierce media attacks?

As I indicated earlier, the commitment to cut public spending was the major mistake made by Labour over the past five years.

It seemed to validate the Tory attacks on Labour’s economic record and to demonstrate that there was no alternative to further cuts.

It shows a serious lack of expertise and a complete unawareness of what is happening outside Westminster in respect of moving away from current orthodoxy.

When the IMF and the OECD, every major central bank and many leading economists are in various ways denying the validity of austerity as a response to recession, seeing inequality as an obstacle to economic growth rather than as a necessary price and pre-condition of it, and recognising the possibilities of monetary policy (albeit through quantitative easing to shore up the banks) as a means of getting the productive economy moving, rather than just as a counter-inflationary instrument, why does Labour remain stuck in a time warp?

If we don’t escape from this intellectual straitjacket, our days are numbered – Pasokification indeed!

During the late 1980s and early 1990s you were possibly the only consistent front-bench Opposition critic of the EU’s Maastricht Treaty, which set the conditions for monetary and fiscal convergence, and which institutionalised harsh monetary control into the European project.

Whilst the UK has been spared the worst excesses of monetary restraint, it is a less-connected part of a European Union which has increasingly acted as an enforcer for economic liberalism and privatisation, and whose institutions remain remote from popular consent.

With the In/Out referendum approaching, is there a serious prospect that the EU – and the Eurozone – can be reformed to reflect a progressive economics that places social and environmental goals at its centre?

If not, then what are the likely consequences of a vote to leave the EU?

The euro was always doomed and we did well to keep out of it.

A single currency was a means of enforcing a single monetary policy for a highly diverse European economy (which was always going to be disastrous), and of setting in concrete a monetary policy that would be congenial to Germany but – reinforcing as it would neo-classical precepts – would do great damage to everyone else.

I fear that the supporters of the euro will press on to the bitter end, whatever the consequences. A ‘grexit’ would help but would be no more than a warning which the Germans would no doubt ignore.

The only solution, which a British withdrawal from the EU might help to achieve, would be to abandon the euro and re-configure a Europe that is built on functional cooperation and growing convergence, with each step going no further than would warrant political support from the people.

The question for the UK is not, in other words, either wholly in or wholly out – it is inconceivable that trade barriers would be re-erected and we would retain, even outside the EU, a huge range of common interests with it – but how best to preserve a European future that has some chance of success, further development and longevity.