The slow death of New Labour, and their responsibility for the financial crisis

Is it just me, or do I detect a sense of fatigue in the coverage of the latest brohaha about the Labour party leadership? Since the 2005 election, I don’t think there’s been a six month period where the question hasn’t arisen, such is the bile and self-loathing that permeates the Labour party. They are the walking dead now, and everyone knows it, so the inevitable squabbling has lost its interest. If by some freak incident they were to win the next election, for example Madeline McCann being discovered in George Osbourne’s coal bunker a day or so before the vote, I think most of the government would be visibly distressed. We all know that the New Labour ship of fools is a directionless and ultimately doomed enterprise, and the whole country from the cabinet downwards  just wishes it was over – a further spell in power would just prolong the pain. I suspect even Gordo would rather not have to go through the drawn-out humiliation spending the next year pretending he knows what he’s doing, and expects to be re-elected.

Labour are going to be spending a very long time in opposition. Unlike the Tories, who have only ever been soulless mannequins without the wit to be ashamed of their naked lust for power, an essential part of the Labour party is its status as a vessel of hope for its members. It is not important that these hopes were often inchoate, sometimes contradictory and mostly unrealisable within the framework of liberal capitalism that Labour operates in, the point was that it stood for something. In terms of the endless mechanistic reinvention that representative democracy demands of parties, these emotional attachments are baggage, and have been repeatedly trodden into the dirt by the vanguard in its long brave march into the future.

It is going to be a long and depressing year, and the best we can look forward at the end of it is David Cameron. For the left, who have been broadly vindicated by the spectacle of international capitalism driving headlong into a shit-heap of its own making, there is a terrible irony in the timing. We are at the ghastly fag end of ten years of the establishment ‘left’ squandering the offices of government by repeatedly disavowing the possibility of bringing about a more equitable and less money riven society, and burning their bridges with demented glee in a firestorm of public assets. The gross incompetence, brutal knuckle-headedness and terminal banality which has characterised Labour’s term in office have extinguished any legitimate claim it had to rule, even on the narrow basis upon which they sought power – that they would somehow be better managers of the out of control Thatcherite fantasy that was late 20th Century Britain.

It's like having the chuckle brothers running the county. Only less funny
It's like having the chuckle brothers running the county. Only less funny

This means that, while outside the mainstream the left is alive and kicking, within the parliamentary system there is very little to be done beyond relentlessly debating what went wrong, like picking compulsively at a scab. I feel it is important during this process to kick Labour while they are down. Repeatedly. Having spent the last ten years being patronised by halfwits, the least we can do in return is to enumerate their failings, and show how conclusively they have been the authors of their own misfortune. This is too large a subject for a single posting, but I’m intending this to be one in a series. I think the best place to start is to look at New Labour’s economic policies and the financial crisis. This will naturally lead us right back to the unhappy tenant of Downing St and the odd way he has contrived to realise his life’s ambition through a hideous shit-storm of his own making, with everything he dreamed of falling around his ears. A salutary lesson indeed: do be careful what you wish for, my children,  or you too may find yourselves in some yourselves in some waking nightmare where your life falls apart and the whole country is openly laughing at your inability to smile convincingly.

It is a brutal end, and it will not be over quickly for any of us. But while he may cut a tragicomic figure, let’s not forget he played the game like a brute these last ten years, and will deservedly be chewing on the consequences for some time hence. The only tragedy about politicians is that when they crash and burn, they drag us down with them. Let it also be noted that this litany of blame isn’t intended squarely for Labour. Their greatest failing – in fact their only failing – was to slavishly follow the political orthodoxies of the day as they saw them. The financial crisis is the failure of the entire political class, and more broadly it is our failure too. Like Gordon, we are sucking up the consequences of our actions – our tolerance of a dysfunctional political system that spews out these oafs, and our acceptance of the numbskull gibberish that it takes as self-evident truth.

So, without further ado…….

Let me count the ways in which Gordon Brown and the New Labour project bear responsibility for the financial crisis

Basically mate, the important fact is you've got to squeeze inflation out of the system. I don't suppose you have any mescaline, by the way?
Basically mate, the important fact is you've got to squeeze inflation out of the system. I don't suppose you have any mescaline, by the way?

1. Independence of the Bank of England. Everyone got extremely excited about this, and Gordo dined out on it for years. Characteristically, Blair wasn’t told until shortly beforehand, and this was exactly the kind of deft political outflanking manuvre that Brown  has tried to pull off again (c.f. election that never was, 10p tax band, MP’s expenses/youtube) and utterly fucked up. It was politically extremely bold, and part of a package which shunted the Tories off their territory of owning ‘economic competence’ and into the wilderness. The problem lies in that term ‘economic competence’, however. Managing the 4th largest economy on the planet is an inherently political activity, and not just a matter of doing it ‘right’. Handing it over to a quango (which is what the monetary policy committee technically is) might be a good way of marking yourself out from your interventionist predecessors, but it is not going to be problem free. Lately the independent Bank has been biting Gordo on the arse in the form of Mervyn King, who seems to have all sorts of ideas about how Alistair Darling should be handling fiscal policy, and won’t shut up about it. More substantially, the MPC showed themselves to be about as prescient as all economists and witch doctors, keeping interest rates at 5% through to September 2008 when everyone in the country knew that businesses were experiencing problems accessing credit. In retrospect, this almost certainly made the recession deeper.

2. Markets über alles. At the heart of the Bank of England decision, and these policies in general is deep conceptual confusion about role of economics and politics. This goes much wider than Nu Labour & Gordo – it is at the heart of the political orthodoxy of the  our times. The idea that there is a ‘right’ way to be setting interest rates comes from thinking about markets as being in some way ‘natural’, rather than arising from particular social circumstances – as such they are thought to only require minimal oversight by right thinking persons, and they will work their wonders in their own mysterious way (this is quite literally magical thinking). You don’t ever hear politicians talk like this directly, but it is at the heart of everything they do and say. It then follows that markets are much better at organising things than people, and should be introduced into as many spheres of human activity as possible, including realms which should properly be the domain of politics.

As a topical example, let’s look at Dr Daniel Urbani, who accidentally killed a man through an overdose of diamorphine. The reasons we had a sleep deprived German doctor let loose on Cambridgeshire are all to do with bringing a market ethos to bear on the NHS. Out of hours contracting was brought in in 2004, in part because the government insists on underpaying doctors, and preferred to improve their terms and conditions (more on this theme later). Instead of having a practice cover your treatment in the evenings and weekends  private companies have been brought in to bid for the contracts. There is no way that a doctor from a practice in the UK would have made this error – it was due to unfamiliarity with diamorphine as they don’t use it in the same way in Germany, to fatigue from driving on foreign roads to an unknown destination, from sticking to a hours that partners in a practice would not inflict on each other, but a company is quite happy to enforce on its wage-slaves. Practices have a bond with their patients that cannot ever be replicated by a contractor – they would not put their patients at risk in the way that ‘Take Care Now’ were only to happy to. While markets are not a bad means for distributing non-essential goods, they are antithetical to direct oversight and control, and can only deal with variables that are quantitative. Everything that can be counted: how many hours the doctor will cover, the distance he will travel, what obligations the contractor has can all accounted for,  but qualitative variables such as how awake the doctor is, cannot be effectively priced, and will fall off the balance sheet.

This incident is archetypal New Labour – they were so keen to get private practitioners into the ‘market’ on health care, that private clinics were given preferential treatment. All markets have externalities; costs that are not included in the transaction, which are borne by the community at large, or by people who did not participate in the transaction. In health care, where virtually every important factor – the quality of the treatment – is not something that can be numerated, this is particularly pernicious, and in this case lead to a man’s death. Rather than treating the level and quality of out of hours care as a political question, it was treated as a solely economic problem – one supplier will come up with the goods that your original supplier is refusing t0 – with predictable consequences.

If there is a phrase more apt for describing the underlying cause of the financial crisis, than ‘blind faith in markets’ I’ve yet to hear it. This deification may have been the political norm, particularly in the Anglo Saxon economies, but Godo enthusiastically lapped up and designed the ineffectual regulation system which sent the banks to the wall. Unfortunately for him, the belief that the outcome of Markets is inherently rational and desirable made as much sense as those 1990s articles of faith: the related contention that ‘History’ had ended with the fall of the Berlin wall, and the notion that the songwriting force behind Oasis was somehow comparable to the heyday of Lennon & McCartney.

3.Fetishising Debt…… to be continued

Leave a Reply

Your email address will not be published. Required fields are marked *