The Strange Non-Death of Labour England

Labour's "historic defeat" has now been upgraded to an "existential threat". According to Jon Cruddas, who seems to have been as busy as Peter Mandelson, "I always thought that the 2010 election result was the worst defeat for Labour since 1918. It was worse than the crisis of 1931 and worse than 1983. But a week ago we suffered an even worse defeat than 2010, so this could be the greatest crisis the Labour party has faced since it was created. It is epic in its scale". This is hyperbole, not to mention a surfeit of numbers. 1931 saw the Labour leadership under Ramsay MacDonald desert the parliamentary party to form a coalition with the Tories and Liberals. In the ensuing election, Labour was reduced from 287 to 52 seats. Oddly, Cruddas also doesn't mention 1979, which was unquestionably the most pivotal defeat ever suffered by Labour. Some of the hype can be attributed to the collapse of Labour in Scotland, but the attitude of English and Welsh voters was more of a shoulder-shrug than a Glasgow kiss. If you want a picture of rejection, complete with bin-liners of clothes dumped in the street, look at the LibDems.

For John Gray, "The threat Labour faces today is larger and more genuinely existential than it has faced at any time in its postwar history. ... Ukip has emerged as the third party in the UK in terms of votes ... and in constituencies where it came second it might be capable of mounting a tough challenge to Labour in 2020". That "might" is doing a lot of work. UKIP is an unstable alliance of conflicting interests, not to mention egos, with little prospect of survival after the EU referendum. A narrow "in" vote might keep it going - Farage had little compunction about finessing his resignation, so ignoring the will of the people should be a doddle - but the idea that it will then supplant Labour as the official opposition to the Tories is far-fetched. The contradictions within UKIP between libertarians and conservatives, and between free-traders and protectionists, means that once the capstone of the EU is removed the edifice will start to crumble. Some working class voters in the North may be disenchanted with Labour, but there is little evidence they see UKIP as anything other than a passing protest vote.

Representative democracies tend to coalesce around two dominant parties through which society can conduct a dialogue about economic privileges, fiscal transfers and personal liberty. For there to be a genuine existential threat to one of them, there needs to be a credible third party waiting in the wings, much as Labour stood relative to the Liberals in 1918, and that party needs to be seen (if only temporarily) as a better vehicle for the views and interests of one of the dominant parties' supporters. Recent examples are the SNP supplanting Labour in Scotland and Syriza supplanting PASOK in Greece. Both insurgent parties succeeded because they detached the majority of voters from the older party. As Gray implicitly concedes, UKIP failed to do this at what is likely to be their electoral high-watermark, not least because Labour actually increased its vote share. The recent wipeout of the LibDems, together with the incoherence of UKIP, means that Labour retains the advantage as far as English and Welsh politics are concerned.

UKIP is often presented as evidence of a wider vulnerability of the centre-left to nationalist populism across Europe, though this requires categorising other essentially centre-left parties, such as the SNP and Syriza, as nationalist or at least expressions of "national self-respect". Genuine nationalist parties (i.e. ones that reject internationalism and indulge racism), like the Front National in France, have deep roots via twentieth century fascism and authoritarianism (e.g. Poujade and Vichy) back to the clerical reaction and anti-semitism of the nineteenth century. Though the FN has expanded its "offer" to exploit the tensions of globalisation, it depends on a hard-core of well-organised ultras with long-standing influence in the state appartus (notably the police). It also depends on the prominence provided by a presidential system, which creates a focal point for the leader cult (despite the expectation that Marine Le Pen might, like her father, make the presidential run-off, her party has only two seats in the Legislative Assembly). This resilient milieu is lacking in England (the nearest equivalent would be Ulster loyalism), while the EU elections have provided only a weak plebiscitary opportunity, so the idea that Labour will evaporate as a parliamentary party in the face of the Farageprinzip is risible.

Some of this taste for the existential in Labour's fortunes springs from the opportunism of "modernisers" who see unfinished business in the links of the party with the trade unions. A couple of years ago, Martin Kettle, noting the common debt of Blair and Miliband to Eric Hobsbawm's 1978 critique, The Forward March of Labour Halted?, claimed that "the Labour party always has to transcend old failed labourism if it is to win and govern", which was a knowing misinterpretation of the old marxist's point about the structural inertia of the British labour movement. Hobsbawm traced the start of the halting process to the 1950s, encouraging the modernisers' tendency to see Labour as a product of the industrial age and thus bound for the same "post-fordist" scrap-heap ("post-industrialisation", "the new economy", and "the digital economy" are all examples of neoliberal teleology). But for all the talk about its roots in organised labour, and the salience of industrial relations in the 70s and 80s, Labour has predominantly been the party of tax and spend (i.e. fiscal transfers) throughout its history, a role it inherited from the Liberals.

The historic supplanting of the Liberal party by Labour reflected the transition from the nineteenth century economy (the concentration of capital through state intervention) to the twentieth century economy (the improvement of labour through state intervention). Just as free trade and empire gave us the Liberal party, so the welfare state gave us the Labour party. The Liberal party declined because it couldn't overcome the contradiction between its opposition to sectional interests and its suspicion of state power on the one hand, and the need to enable the collective management of labour for the benefit of capital on the other. As H G Wells put it, "It organises only because organisation is forced upon it by the organisation of its adversaries". It founded the welfare state, but was unable to mediate between capital and labour in the organisation of the economy (the near-coincidence of the People's Budget and Tonypandy were emblematic of this contradiction). Labour's success lay in combining state intervention in the social sphere (normalised for the middle classes by the Fabians) with support for autonomous labour power (i.e. unions and free collective bargaining).

The economic and geopolitical crisis of the 1970s saw the confluence of various, inter-related factors: increased international competition leading to manufacturing over-capacity and falling profitability; and the oil-price "shock", which triggered the growing unemployment and price rises of "stagflation". The solution in the 1980s was to use unemployment to restrain wage inflation, compensating mid-level workers through easier credit; reduce state intervention ("red tape") and taxes on business to grow profits; open up new sites of profit through privatisation; and offshore production to new labour markets (globalisation). The last of these, combined with the rapid advance of automation as the ICT revolution kicked in, has probably been the most profound as it led capital to the conclusion that it did not need to manage labour en masse any longer. The welfare state - the improvement of labour outside of the market system - was consequently downgraded and gradually absorbed into the market system itself. Once organised labour was defeated in the 80s, the Labour party found itself under pressure to ally with the progressive elements of capital (notably pro-EU multinationals) and rationalise the welfare state to meet capital's new priorities.

The charge of "labourism" - that the party was narrowly economistic, institutionally backward and socially conservative - suited the modernisers of New Labour because it supported the neoliberal proposition that the party should create the conditions for business to flourish, treat government as a species of management, and encourage a globalised liberal culture free of localised social obligations. In truth, labourism died in the 1970s. The SDP split, the failure of the Bennites in the 80s, and the success of New Labour in the 90s were all institutional responses to its demise, variously advocating a bourgeois European party, a sentimental popular front, and an Americanised election-winning "machine". Despite the silly propaganda about "Red Len" McCluskey, there was no return to labourism under Ed Miliband and no suggestion that the party was about to rediscover the socialism that had lain dormant for a century.

The role of the state changed during the neoliberal era to that of a talent-spotter (the "enabling state"), maximising the input of potential (hence the focus on education), but then acting as a filter to separate the compliant and profitable from the growing army of the economically redundant. Welfare has become a series of "tests" as opposed to entitlements, extending the success/failure paradigm now routinely applied to all public services. Job polarisation has increased the rewards to skill at the top-end of the labour "market", but it has also reduced the value of state subsidies at the bottom-end, in the eyes of big capital, hence the relentless focus on reducing "welfare bills" and the demonisation of the underclass. The problem is that more backward forms of capital - e.g. small businesses and landlords - remain wedded to state subsidies, in the form of in-work benefits, making it impossible for governments to radically "shrink the state". Despite 40 years of rhetoric, the extent of state intervention has barely changed even if its composition has (e.g. council housebuilding has given way to Ofsted).

The modern economy is characterised by endemic labour insecurity, the poor performance of the newer service sector relative to the older manufacturing sector, and the increase in those dependent on state benefits to top-up or replace wages (from 20% of working-age households in the late 70s to 38% now). We're seeing signs not merely of secular stagnation but of saturation in the service sector as technology serves to depress aggregate productivity. As Andrew McAfee puts it (explaining why "lousy productivity growth is entirely compatible with strong tech progress"), "lots of automation in manufacturing" may be driving "lots of jobs growth in the low-productivity service sector" and "sluggish overall demand growth". While wages remain low, the service sector has little incentive to automate, so investment is weak, aggregate demand is weak, in-work benefits are high, and job growth is biased towards low-wage and precarious roles. This in turn means inefficient use of skills in the short-term (e.g. baristas with PhDs), and a potential worsening of skills composition over the longer term (i.e. it makes less sense to invest in a PhD in the first place).

The existential question for Labour is whether the current transition - to an economy characterised by job polarisation and a surplus of cheap labour - requires a different political formation. Rachel Reeves's comment that "We don’t want to be seen, and we’re not, the party to represent those who are out of work" suggests not yet - i.e. the party remains focused on those who "aspire" to an improved life centred on work (ironically, labourism lives on in the neoliberal insistence that work is liberating). The financial crisis showed the limits of neoliberalism, but neoliberal hegemony remains intact. As it stands, there is little likelihood of Labour fundamentally changing its tune, but that is not in itself a vulnerability. None of the "challenger" parties has any real idea how to address these contemporary structural issues. The Greens have come closest, perhaps because their politics encourages imagination about the future, but their confusion over a basic income suggests that they remain trapped in the contradictions of their philosophy. The LibDems have no answer to the plight of the low-paid beyond a self-defeating increase in the tax-free allowance, while UKIP's insistence that low wages are solely the fault of immigrants isn't going to garner mass support.

It is easy to overdo the pessimism. Bill Mitchell reckons that "the Labour-type parties, given their historical charters, have now run out of meaning. They neither serve the working class (in its various states of employment and unemployment) nor capital and are thus expendable for both." Clearly, New Labour did serve capital well, and it even made some real improvements for society at large in terms of reducing pensioner and child poverty and repairing the fabric of public services. The problem is that this looks insufficient in an era in which the electorate is increasingly frustrated. This is not just a centre-left issue, but one for both main parties. Labour and the Conservatives have seen their combined vote share decline from a peak of 96% in 1955 to the point today where they each expect to secure roughly one third of the vote. Since 2005, no party has exceeded 40%, with the largest securing around 36% and the losers settling around 30%. In the context of recent history, a 35% strategy actually looks perfectly reasonable. In 1979, Labour lost the election with 36.9% of the vote. In 2015, the Tories won the election with precisely the same share.

Though there are now more alternative parties to the traditional big two, they tend to be variations on a communitarian theme, which is often styled as "nationalist" but can just as easily identify with another "higher power" such as the environment. John Gray is surely right to see this as partly a "reaction against the upheavals of globalisation" and the loss of autonomy. In this sense, UKIP, the SNP, Plaid Cymru and the Greens have much in common, and are categorically different to the racist nationalism of old exemplified by the NF and BNP, despite the strain of bigotry among UKIP members and supporters (in reality, no worse than unpolished Tories). Their differences, which are essentially tonal, reflect their supporters' anxieties, thus UKIP promise a better yesterday, with a default policy of "Whatever it is, I'm against it". This has obvious limitations as the basis for a majoritarian platform. Nigel Farage turning the dial up to 11 isn't going to get UKIP over the line across the North.

In contrast to the Kippers' brand of John Bull nationalism, the charm of "civic nationalism", of the type embodied by the SNP and now advocated by Blue Labour, is that it allows us to construct a national identity that is simultaneously nostalgic and forward-looking, internationalist and socially cohesive. It's really just a sentimental rerun of our greatest hits, from Orwell's The Lion and the Unicorn to the 2012 Olympics. But this is too diffuse to form a coherent political position on its own, as opposed to providing a veneer of self-deprecating patriotism that can accommodate both Jeremy Clarkson and Billy Bragg. The more misanthropic critics concede that this imagined community is gone, if it ever existed, but reveal their sorrow by attributing blame to moral decline and consumerist triviality. For David Selbourne, "What was once a polity is now largely composed of rights-bearing isolates, wheeling their trolleys through a shopping mall in unending file." The truth lies somewhere in between: we were never as homogenised a community as the myth has it, but we are not as atomised as the modern Cassandras believe.

Despite the anguish of the general election result, Labour does not face an existential threat, though it does face a stiff challenge to unseat the Tories. Its position in Scotland cannot get any worse, and Plaid Cymru looks incapable of mounting an SNP-like challenge in Wales. Any revival in LibDem fortunes is likely to hurt the Tories more than Labour (i.e. centre-left deserters were probably more disgusted by the coalition and less likely to return). UKIP isn't going to reinvent itself as a  social democratic alternative to Labour, and a nationalist party to the right of the Tories isn't going to graduate beyond a protest vote. Ironically, the genuine existential threat to the Labour party would be the desertion of the unions, not just because of the money but because of their organisational sinew, though this would probably just hasten the Blairite resurgence and the party's evolution into the British Democrats, dependent on big capital and City hedge-funds. There may be a vacancy for the Labour leadership, but there doesn't appear to be a vacancy for a centre-left party in English politics.