Lecture 9 New Labour and the Third Way

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Lecture 9New Labour and the Third Way

• Dr Tom Quinn
• GV519 British Political Parties
• 2 December 2008

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Outline

• Aim To examine nature of New Labour and assess
  competing interpretations
• Crisis of social democracy
• Emergence of the Third Way
• Ideology values vision of the good society
• How to interpret the Third Way
• Social-democratic revisionism?
• Thatcherism with a human face?
• Old Labour redux?

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Crisis of Social Democracy

• End of post-war economic boom in 1970s
• Fiscal crisis of the state
• High tax--spend policies ineffective
• Mass unemployment, high inflation, strikes
• Demise of Keynesianism
• Social democrats no longer had an economic policy
• New Right critique of state
• Electoral setbacks for centre-left parties

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Constraints on the Labour Party

• Electoral voters rejected Labours policies
• Support for Tory policies on economy
• Support for constraints on trade unions
• Tough on crime
• Sociological demise of working class
• Deindustrialisation shift to service economy
• International globalisation
• Competition from abroad
• Financial markets constrain high-spending govts
• Ideological end of Cold War
• Collapse of socialism?

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The Third Way (1)

• Social-democratic ideology in need of revision
  (again)
• Tony Blair Labour leader in 1994 new direction
  for party
• Anthony Giddens sociologist, former director of
  LSE
• The Third Way The Renewal of Social Democracy
  (1998)
• New Times social, economic, technological
  change
• Demise of class politics
• Working class is not an agent of historical
  change
• No alternative to the market globalisation
• Limitations of state intervention (esp.
  nationalisation)
• Invest in education, skills, infrastructure to
  compete in global economy (enabling state)
• New social contract rights and responsibilities
• Move beyond left right the Third Way
  (radical centre)
• Combine best aspects of New Right Old Left
  (and, not or)
• NB Third Way term not always used (even when
  ideas the same)

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The Third Way (2)

• Ideological values?
• Vision of good society Equality? Freedom?
  Fairness?
• The reason for the changes we are making is not
  for their own sake but because they are the means
  to the fairer society, where aspiration and
  opportunity are open to all (Blair, 2002)
• Values equal worth, opportunity for all,
  responsibility and community (Tony Blair, The
  Third Way, 1998)
• Equal worth not same as equality
• Sought social inclusion end to poverty
• Employment as best route out of poverty
• Signalled that state should enable, not direct
• E.g. active labour market policy (training, New
  Deal, etc.)
• Big role for markets

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Triangulating New Labour
New Labour Social justice and economic efficiency
Thatcherism Economic efficiency, no social justice
Old Labour Social justice, economic inefficiency
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OLD LABOUR
NEW LABOUR

• Class
• Producers
• Industrial economy
• Equality of outcome redistribution
• Tackle poverty
• Welfarism
• Social welfare rights
• State provision of public services
• Keynesianism
• Mixed economy
• Nationalisation
• Social reform

• Community
• Consumers
• Post-industrial economy
• Equality of opportunity training and education
• Tackle social exclusion
• Welfare-to-work
• Rights responsibilities
• Mixed economy in public services
• Globalisation
• Market economy
• Regulate private sector
• Modernisation

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New Labour Thatcherism (1)
Tony Blair openly and rightly supported some
of the economic reforms she Mrs Thatcher
carried out trade unions brought within a
proper legal framework industrial restructuring
including some necessary privatisation
incentives and reward for success while making
clear his disagreement with her failures on
economic stability, public sector investment,
social division and, latterly, isolationism. Pet
er Mandelson, cited in M. J. Smith, Defining New
Labour in S. Ludlam and M. Smith (eds),
Governing as New Labour (2004), p. 213.
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New Labour Thatcherism (2)

• Left Politics of catch-up (Hay, Heffernan)
• New Labour maintained key features of Thatchers
  economic neo-liberalism
• Privatisation no renationalisation
• Trade-union power kept anti-union laws
• Taxation kept low income-tax rates
• Deregulation esp. labour market open economy
• Thatcherite policies on crime, defence
• Thatcherite leadership style
• Decisive, authoritarian, centralising

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New Labour Economic Competence 1997-2005

• New Labours greatest success gaining
  reputation for economic competence
• No run on the pound, huge spending cuts, mass
  unemployment, rampant inflation, etc.
• UKs economic performance under Blair good in
  comparative perspective
• Steady growth low unemployment low inflation
  low mortgage rates (and rising house prices)
• Rising Govt spending taxes (see later)
• 2008 economic crisis reassessment of Blair
  years?

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New Labour Socialist Themes

• Five major themes of socialism (Heywood)
• Community liberal communitarianism, not
  old-style collectivism room for individualism
• Cooperation networks, partnership, consensus,
  not class conflict
• Equality of opportunity, not outcome
• Social class greater focus on middle classes
• Public ownership abandoned (until 2008!)
• New Labour traditional Labour values in a modern
  setting?

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Retreat from Public Ownership (1)

• Old Clause IV (1918)
• To secure for the workers by hand or by brain
  the full fruits of their industry and the most
  equitable distribution thereof that may be
  possible upon the basis of the common ownership
  of the means of production, distribution, and
  exchange, and the best obtainable system of
  popular administration and control of each
  industry or service.

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Retreat from Public Ownership (2)

• New Clause IV (1995)
• 1. The Labour Party is a democratic socialist
  party. It believes that by the strength of our
  common endeavour we achieve more than we achieve
  alone, so as to create for each of us the means
  to realise our true potential and for all of us a
  community in which power, wealth and opportunity
  are in the hands of the many, not the few, where
  the rights we enjoy reflect the duties we owe,
  and where we live together, freely, in a spirit
  of solidarity, tolerance and respect.
• 2. To these ends we work for
• (a) A DYNAMIC ECONOMY, serving the public
  interest, in which the enterprise of the market
  and the rigour of competition are joined with the
  forces of partnership and co-operation to produce
  the wealth the nation needs and the opportunity
  for all to work and prosper with a thriving
  private sector and high-quality public services
  where those undertakings essential to the common
  good are either owned by the public or
  accountable to them.

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Retreat from Public Ownership (3)

• Public ownership usually nationalisation
• Turned into ideological totem for the left
  litmus test of socialism
• Nationalised industries bureaucratic,
  inefficient, captured by public-sector unions
• Blair nationalisation is a means, not an end
• A means of delivering social justice
• but no longer relevant for pursuing socialist
  goals
• Financial crisis (2008)
• Partial-nationalisation of banks!

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New Labour Public Services

• Modernisation more capacity, higher quality
• Huge increase in funding (esp. NHS)
• Performance targets for public sector
• Reform of structures competition, choice, PFI

• Education
• Specialist schools city academies selection?
  Abandoning comprehensives?
• University tuition fees

• Healthcare
• Funding doubled in real terms
• Foundation hospitals
• Independent treatment centres
• Mixed economy in health

• Tension central targets vs decentralisation
• Problem how to ensure delivery, money well
  spent

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New Labour Growth of the State
Source HM Treasury, 2004 Spending Review Note
Expenditure in 2004-05 prices
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New Labour Social Justice

• New Labour Old Labour?
• Minimum wage
• New Deal
• Child trust funds universal benefit
• Tax and pension credits to tackle poverty
• Economic redistribution via stealth taxes
• Taxes ( of GDP) 39.3 (1997) to 42.4 (2006)
• Rise in national insurance contributions (2002)
• Pension fund levies
• Windfall levies on privatised utilities
• Stamp duty on house sales
• Left-wing criticism New Labour reduced poverty
  but not inequality (aim of true socialists)

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Competing Perspectives on New Labour

• New Labours Third Way revisionism alternative
  to neo-liberalism old-style social democracy
• New Labour as Thatcherism continuation of
  neo-liberalism
• New Labour as Old Labour redux traditional
  tax--spend social-democratic Govt

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New Labour under Brown

• Brown continuation or break with New Labour?
• Blair Brown co-architects of New Labour
• Clash of ambitions but ideological divide?
• Both wanted open economy, split on public
  services EU
• Brown difficulties courting Middle England
• Falling poll figures
• 10p tax fiasco antagonised Labours core vote
• Was New Labours Third Way an ideology for the
  economic good times?
• Any ideas to deal with recession?
• Or just a return to Old Labour?
• Nationalised banks
• Govt spending its way out of recession tax
  cuts borrowing?
• Higher taxes on the rich

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Conclusion

• To what extent is New Labour a break with the
  Labour tradition?
• What does New Labour see as the role of the
  state?
• A key question in debates about ideology
• Does New Labour have an ideological vision of
  the good society?
• Old Labour equality
• Thatcherism negative freedom
• New Labour fairness?