The UK Labour Party in the late 20th century was shaped by two historical events in British economic history. The 1970s and the Death of Bretton Woods in particular saw the discrediting of Keynesianism as a practical methodology of governing economic life. Coupled with Stagflation and the problems of Deindustrialization, Labour failed during those years to provide a genuine policy that would have enabled them to remain in control of Parliament by the 1980s. This allowed the Tories to become encouraged by Thatcherism, which was more Whig than Tory, to embark on a modernization of Neoliberalism within the UK. While a study of Thatcherism with regard to Margaret Thatcher and the Tories is beyond the focus of this Entry, it should be noted that part of the discussion related to New Labour and Blairism is tied to them.
What can be said here is that Thatcherism reshaped the parameters in which political-economic ideas were expressed and which ones became more or less popular among the British people. After the 1980s, it eventually became unfashionable for anyone to be advocating ideas resonating with “Old Labour,” as Privatization and Deregulation occurred alongside the weakening of the unions. Even Corporatist, Syndicalist, Socialist and State Capitalist ideas found no place there. Thus, in a manner comparable to the ideological shifts among European Social-Democratic parties after the collapse of the Soviet Union and Eastern Bloc countries, the Labour Party underwent a radical transformation in its ideological outlook during the 1990s. Key to those developments were Blairism and the rise of a “New Labour” that sought to deviate from the “Old Labour.”
The terms “Blairism” and “New Labour” are inseparable from each other because they reflect an emerging historical epoch that continues to be relevant, even in contemporary times. I say this because there is no indication that the Labour Party truly abandoned New Labour, and it remains doubtful that they will anytime soon. Therefore, the discussion over the essence of New Labour can be summarized as the following questions:
- Was New Labour a continuation of Thatcherism? It is indisputable that Thatcher did succeed in creating a policy environment in the UK where it was virtually unpopular for any political party to entertain proposals of abandoning Neoliberalism, not to mention the Jeffersonian Empire of Liberty. The UK was going to remain a part of the EU/NATO, with special emphasis on the NATO aspect, as not everyone in Parliament supported British integration into the European Union. Again, it remains to be seen if Labour or anyone else will succeed in overcoming the legacy of Thatcherism, which does include Blairism as Thatcher herself was convinced in 1997 that Labour would continue what she started.
- Was it the byproduct of the various “Third Way” endeavors that were popular in the 1990s? The 1990s saw a number of political parties engage in “Triangulation” and redefine their party programs to suit the geopolitical climate that emerged after the Soviet Union’s collapse. In the absence of genuine ideological rivals, Neoliberalism found itself trying to figure how it could prevent its old rivals from returning by responding to whatever encouraged people to adopt those other ideologies in the first place. The purpose of New Labour was to strike a balance between the Social-Democracy of Old Labour and the type of Liberal Capitalism that characterized the Tories and Whigs.
- Or was it an attempt to redefine the Labour Party to suit 21st century contexts? The Labour Party has consistently been a Social-Democratic party throughout much of its history. It always accepted the hegemony of Neoliberalism and the Empire of Liberty because it only sought to make the “Capitalism” in Liberal Capitalist Parliamentary Democracy more equitable for those vulnerable to its excesses. There is a certain Utilitarian logic to that sort of thinking, which I alluded to in my previous post on Liberal philosophy.
All of these conditions were what allowed Blairism to assume the characteristics that it did between the late 1990s and late 2000s. In essence, Labour rebranded itself as a political party that wished to continue the legacy of Thatcherism, promoting policy reforms that mitigated the worst aspects of Neoliberalism. It avoided openly challenging Neoliberalism, instead trying to make Neoliberalism work in the interests of everyday people in the UK. Instead of Parliament creating employment opportunities through nationalization, Parliament provided tax credits and pension benefits to those whom Labour believed would benefit the most. Rather than oppose the Empire of Liberty on grounds such as Globalization, Labour embraced it because the idea of a world where Globalization would even recede slightly was unfathomable during those years.
This ideological outlook can be discerned from the policymaking decisions that Labour took in various economic and fiscal policies. Interest Rates were employed to keep Inflation Rates below 2%, whereas government spending did not exceed the fiscal budget prior to the Great Recession. Whatever achievements that Labour made to bring the UK economy toward a Mixed Economy during the reign of Bretton Woods continued to be reversed in favor of the Market Economy. Rather than upholding Production for Utility, Labour emphasized Production for Profit on whatever was not privatized.
There was always one aspect of New Labour that continued to bother me as I sifted through the economic data from those years. As I had suspected, when Labour and other European Social-Democratic parties began openly embracing Neoliberalism in the 1990s, the dynamics of Social Corporatism among those inside and outside their parties also changed with Social-Democracy.
Previously, the Social Corporatist model envisaged a triumvirate of Parliament, Organized Labor and the Business Community in which Parliament resolved any emerging disputes between Organized Labour and the Business Community. Where Social Corporatism differs from Social-Democracy was that it tended to view the two as business partners, and that Organized Labor and the Business Community are not the same entity that exists as part of Civil Society and beholden to the laws of Parliament. This is an important distinction because the Social Corporatist model replaced Organized Labour with the Financial Markets in the 1990s, implementing a new triumvirate that solidified a Parliament’s catering to the interests of the Fractional-Reserve Banking System and the Market/Mixed Economy. Obviously, Organized Labor was going to be alienated under the terms of that arrangement because the labor unions will cease to be a key force.
As for Social-Democracy, the roles of Parliament and Civil Society were changed to reflect the growing importance of the Market as an entity separate from Civil Society. One important legacy of Thatcherism and Neoliberalism more broadly speaking is the belief that the Market and Civil Society exist as separate entities and not as institutional actors of the same Liberal Capitalist nation. In a world order where Technology was employed in the interest of Kapital and where Globalization offered promises of more Kapital from developing countries with cheap labor, it became imperative for Parliament to support the Market rather than the Civil Society. Like the playbook of Supply-Side Economics, if Parliament allows the Market to thrive, eventually its effects will trickle down to Civil Society. Once Civil Society has enough Kapital to spend, it can afford to pay higher taxation rates, the revenues of which could then be reallocated toward education and healthcare programs, thereby yielding a feedback loop.
What I just described were two other key aspects of New Labour. There were efforts made toward the development of more equitable Minimum Wages closer to those found in the EU/NATO and funding of the British educational and healthcare systems did increase during those years. Such measures could not have been achieved without larger tax revenues that came as a result of economic policies which benefited the Market over Civil Society, the Consumer over the Worker. The also could not have been made possible without much of the tax revenues coming from the Financial Markets and the enormous clout that London has over the international finances of the Empire of Liberty, which was certainly the case prior to the Great Recession.
No discussion of New Labour could be considered complete without briefly acknowledging that its legitimacy later came into question after the Great Recession. The 2010s saw the UK undergo austerity spending and its departure from the European Union. It may be two decades since the end of that period, but one cannot help but wonder as to what extent the Labour Party remains unable to move on from those years. Once again, it remains to be seen if they are willing to return to old ways or continue trying to redefine itself at this stage of the 21st century.
Categories: Economic History
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