On one side of the House of Commons sits an opposition
leader whose confidence is growing by the day.
Originally elected almost by accident and against the wishes of the parliamentary
party, that leader enjoys huge support among the party rank and file. Although slated as an extremist and as
unelectable by the MPs, journalists and academics that make up the “Westminster
Bubble,” there has been a growing surge of support for the leader from Britain’s
young (18-35) generation.
On the other side of the House is a Prime Minister whose
standing in the country is falling by the hour.
No longer able to command a majority in the house, barely managing to
quell backbench hostility, and dependent upon the votes of Ulster Unionists to
govern, it is only a matter of time before the government falls.
This is a reasonable description of the situation Britain
awoke to this morning. It is, however, also a
description of the British parliament 40 years ago. The difference was that in 1977 it was a
right-wing Tory leader that stood on the threshold of tearing up the political “centre
ground” consensus and replacing it with one of her own – the neoliberal orthodoxy
that has been coming apart at the seams since 2008.
Margaret Thatcher had been unexpectedly elected in 1975 after
the favoured right wing candidate, Keith Joseph, was obliged to withdraw from
the contest after expressing sympathy for the idea of compulsorily sterilising
the poor. The candidate favoured by MPs,
William Whitelaw (who later became Thatcher’s Home Secretary) was regarded as
being too similar to the defeated Edward Heath.
The expectation once Thatcher became leader of the opposition was that
she would abandon her (in their day) extreme policies in favour of a platform
closer to the post-war consensus that had prevailed since 1951 – when instead
of reversing the 1945-51 Labour reforms, the Tories embraced them and extended
them (for example, abolishing prescription charges and building more council
houses) with the result that the Tories went on to govern for 13 years.
By the late 1960s, the post-war consensus was breaking
apart. Full-employment had resulted
(predictably) in a wage-price spiral that made Britain’s industry uncompetitive
in international markets. This resulted
in a falling pound and a growing balance of payments (current account)
deficit. Attempts by successive Labour
governments to persuade trade unions to voluntarily weaken their bargaining
position failed in large part by pressure from grassroots union members. A proto-Thatcherite
attempt by the Heath government to achieve the same aim was similarly defeated.
What Thatcher sensed was that there was a new anti-consensus
mood in Britain, particularly among those younger voters who had not lived through
the privations of war and depression which had shaped the post-war
consensus. As Ed
Howker and Shiv Malik note:
“In 1979 Margaret Thatcher
received a 16 percent swing in support from young people aged 18-35 – the baby
boomers – significantly more than any other group… Without their support she
wouldn’t have gained power.”
This is how political and economic consensus breaks down –
as Max Planck once put it – “one funeral at a time.” It is a political given that older people are
far more likely to vote than younger people.
It is also a given that older voters are more conservative (with a small
“c”) than younger voters. This means
that where there is consensus between the two major parties within Britain’s
archaic first-past-the-post voting system, politics tends to gravitate to the
so-called centre ground. In the period
1945-1975, this political consensus – built around Keynesian economic ideas –
was centre-left (i.e. social democratic rather than socialist or
communist). In the period since 1985,
the consensus – built around the Monetarist ideas of economists like Hayek and
Friedman - has been centre-right. Rather
like the 1951 Tories, in 1995 Labour’s Blairite “modernisers” embraced what by
then was known as Thatcherism, and then went on to do it better than the Tories
(e.g. cutting social security and beginning the process of privatising Britain’s
public services) with the result that they, too, enjoyed 13 years in government.
There is some irony that so many people projected the ghost
of Margaret Thatcher onto the flawed and damaged personality that is Theresa
May. Far from being strong and stable,
Mrs May turned out to be an insecure and bullying control freak, whose fear of
criticism caused her to exclude even her own ministers from drafting her
election manifesto or from mapping out her election campaign. The result was that she turned a 17 seat
majority and an apparently unassailable 20 point lead in the polls into a
minority and – if today’s polling is correct – a 5 percent lead for a newly invigorated
Labour opposition.
But the deeper reason why Theresa May cannot channel the spirit of
Margaret Thatcher (any more than Donald Trump can resurrect the ghost of Ronald Reagan) is that everything has changed.
In the mid-1970s:
- inflation was high
- profits were low
- employment and wages were high
- governments and unions were powerful
- business and finance were weak
- interest rates were high
- access to credit was limited
- taxes were high
- inequality was low
These are the exact opposite to the problems we face
today. Since 2008 we have experienced
severe deflation which weak governments have failed to resolve through low
interest rates, tax cuts and debt-based quantitative easing. Nevertheless, there is huge structural
opposition to any shift away from the neoliberal economic orthodoxy with its
insistence on “sound finance” and austerity cuts. In a foresighted paper from 1943,
Michael Kalecki more or less predicted current economic policy:
“In current discussions of these
problems there emerges time and again the conception of counteracting the slump
by stimulating private investment.
This may be done by lowering the rate of interest, by the reduction of income
tax, or by subsidizing private investment directly in this or another form.
That such a scheme should be attractive to business is not surprising. The
entrepreneur remains the medium through which the intervention is conducted. If
he does not feel confidence in the political situation, he will not be bribed
into investment. And the intervention does not involve the government either in
'playing with' (public) investment or 'wasting money' on subsidizing
consumption."
The failure of quantitative easing (i.e. “subsidizing
private investment”) tax cuts and historically low interest rates to reverse
the post-2008 depression has been felt most profoundly by the young. Unlike their parents and grandparents, who
enjoyed free education and cut price council house sales, today’s young face
crippling student debt and house prices far greater than they can ever hope to
afford. Moreover, as the economic slump
continues, the young are increasingly aware that it is their generation that is
going to be asked to pay the price of an aging population and the tax costs of bailing out the banks while receiving no
support to pay back their own debts.
Without wishing to take anything away from Corbyn/Labour’s
campaign – which proved far more competent that any of the Westminster Bubble commentators
had suggested – it was these deeper structural issues that caused so many young
people to come out to vote to prevent another majority Tory government. It is no surprise, that Corbyn – who was
regarded by opponents and allies alike as an anti-establishment (i.e.
anti-consensus) extremist – became the repository for youthful discontent . If you have
reached the point where you need to
change the way politics and economics are done, you are going to look to the
extremes for a solution.
Nor were Britain’s young generation the only ones to rally
behind Corbyn/Labour. A large part of
the older UKIP/Leave vote – which delivered the Brexit shock to a complacent
political elite – switched to Labour too.
Since these were the voters that Theresa May assumed would embrace the
politics of the hard-right, their switch to Labour was in its way as crucial as
the youth vote. It is likely that they
broke this way for similar reasons – stagnating incomes, insecure employment,
poor housing and public services, etc… issues that May either ignored or
promised to worsen.
This isn’t 1979 all over again. But I am minded of the words attributed to
Mark Twain: “History doesn't repeat itself but it does rhyme.” It might well be that the neoliberal
economic/political consensus is coming to an end. If so it will be helped along by the deeper political
arithmetic of Mrs May’s failed attempt to secure a massive majority. At the start of April, Mrs May was stood in
front of three hundred cheering Tory MPs.
Today she is stood in front of at least 100 Tory MPs who face losing
their seats at the next election. They
are no longer cheering; several are already sharpening metaphorical
knives. On the other side of the House,
Labour MPs who stood despondent when the election was called – seeing it as no
more than a mercy killing for their supposedly unelectable party – are rallying
behind their leader. Mr Corbyn now has
around 100 MPs sat behind him who are only there because of the strength of the
campaign that he ran. Former critics are
swallowing humble pie and jostling for their places in the new shadow
cabinet. Like the despondent figure of Edward
Heath after 1975, only the most embittered Blairites continue to carp behind Mr
Corbyn’s back.
We cannot know if we have reached one of those historical
moments where everything changes. For
all of the euphoria around Mr Corbyn’s campaign, Labour still lost the election. Mrs May is still Prime Minister and, with the
help of the DUP, the Tories can maintain a majority in Parliament – the numbers
simply do not work for any Labour-led “rainbow coalition.” Nor should we rule out LibDem treachery at
some point (perhaps with a new Tory leader) in the parliament – similar deals
with the Liberals and the Ulster Unionists kept Labour in power from 1974-79,
so we should not assume that the Tories will be gone anytime soon.
What
matters now is whether Labour can cement a new coalition of political forces in
the country. This will involve
developing a platform that can offer hope not just to Britain’s youth, but also
to the downtrodden voters in Labour’s neglected ex-industrial heartlands. That, in turn, means escaping the neoliberal
consensus that says that rising incomes are always
bad; that low taxes are always good;
that public borrowing and investment are always
to be avoided; and that public ownership is always wrong. It is up to Labour politicians and Labour
supporters to demonstrate that it is precisely these neoliberal ideas – that were
entirely appropriate in the conditions of the 1970s – are the very things that
are now holding everybody back, and that a new economics and politics can meet
the needs of Britain’s young and old alike.