BLAIR’S BRITAIN, 1997–2007
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that the economic crisis should be met by a rise in taxation rather than by
cuts in public services was rapidly dismissed by Callaghan and Healey,
and pressed, even on the left, in a somewhat lukewarm manner.12
The undermining of Crosland’s first two presuppositions – that the
state could control the economy, and that a beneficent state could be
trusted to redistribute income and wealth – meant that during the long
period of Conservative rule, from 1979 to 1997, the prospects for social
democracy receded into the distance. Many of the things that Crosland
insisted could not happen – a return to high unemployment, regressive
use of the taxation system, drastic cuts in the public services and the marginalisation of the trade union movement – did in fact happen, and
proved no barrier to Conservative electoral success. By the 1990s, if not
earlier, it had become clear that social democrats faced a completely
changed landscape, one dominated by new techniques of economic management, accompanied by considerable scepticism as to the value of government intervention and even of expenditure on the public services.
After its unexpected defeat in the 1992 general election, the Labour Party
drew the lesson, whether rightly or wrongly, that electors, whatever they
told the opinion pollsters, would not, in the privacy of the voting booth,
support a party which proposed higher taxes to finance the public services. Improvements in the public services, therefore, would have to be
found in other ways.
But there was a third presupposition that lay at the heart of Crosland’s
analysis. It was that social democracy could be achieved in one country.
There is indeed a paradox at the heart of social democracy. For social
democracy, like its ancestor, socialism, is, in essence, an internationalist
doctrine. Yet, in practice, the most favourable conditions for social
democracy lie in highly cohesive nation-states such as Norway or Sweden.
For it depends upon a sense of social solidarity, more likely to be present
in small and cohesive nations than in large multicultural societies or in
any international community. That is because social democracy requires
citizens to feel a sense of social obligation towards their fellows such that
they are prepared to pay in taxation to secure benefits for them. The
stronger the sense of community, the more likely it is that such a sense of
social obligation will be felt.
12 See ibid. for a most valuable account of the effects of the 1976 crisis on the ethos of social
democracy.
William Beveridge, though far from being a social democrat, had
appealed to such sentiments in his famous report of 1942. He had
declared that the welfare state would give: ‘concrete expression – to the
unity and solidarity of the nation which in war have been its bulwark
against aggression and in peace will be its guarantees of success in the
fight against individual want and mischance’.13
Of course, even in a single state, the sense of solidarity is not always
easy to achieve, and there are many who feel resentful at contributing in
taxation to provide for the welfare of ‘spongers’. During the 1920s,
Labour MPs told Ramsay MacDonald that their own supporters, men
and women in low-paid jobs, were the most stringent in demanding that
‘scroungers’ be denied benefits.14 In late 1975, arguing that public expenditure cuts would not necessarily be unpopular, Denis Healey, Labour’s
Chancellor, told the cabinet, ‘At the Labour clubs you’ll find there’s an
awful lot of support for this policy of cutting public expenditure. They
will all tell you about Paddy Murphy up the street who’s got eighteen children, has not worked for years, lives on unemployment benefit, has a
colour television and goes to Majorca for his holidays.’15 The reference to
‘Paddy Murphy’ implies, what may well have been true, that for some
Labour voters Irish immigrants were not seen as part of the national
community. More recently, it has been argued that many voters do not
regard non-white immigrants or asylum-seekers as part of that community, and resent being asked to contribute towards their welfare. Social
democracy, therefore, would be more difficult to achieve in one country
when that country was multicultural than when it was ethnically homogeneous, as seemed to be the case when Crosland wrote The Future of
Socialism. But it would be even more difficult to achieve at the end of the
century, by which time Britain had become subject to forces which lay
completely outside the country – the market forces of globalisation and
the rules of the European Union.
Crosland had believed that social democrats could pursue policies of
their choice largely untrammelled by foreign opinion. In the 1950s, this
seemed to make good sense. Britain remained a sheltered economy, protected by tariffs and exchange controls. Admittedly, the Conservatives
were gradually liberalising the economy, and in 1958 they made the pound
13 Social Insurance and Allied Services, Cmd 6404 (London: HMSO, 1942), para. 8.
14 See Alan Deacon, In Search of the Scrounger: The Administration of Unemployment
Insurance in Britain, 1920–1931 (London: Bell, 1976).
15 Tony Benn, Against the Tide: Diaries 1973–76 (London: Hutchinson, 1989), p. 461,
13 November 1975.
convertible. Labour criticised the Conservatives for liberalising the
economy too quickly, for some social democrats looked longingly backwards to the days of the Attlee government when, so it seemed, intelligent
use of controls had helped promote economic recovery, and Britain had
appeared to be an island beacon of social democratic hope in an otherwise
unsympathetic world.
By the 1990s, however, it had become clear that social democracy in
one country was no longer a feasible option. François Mitterrand had
tried it in France in 1981, seeking to expand the economy without regard
for the international markets, but its failure had pushed him back to
the policy of the franc fort and tighter European integration. Gerhard
Schroeder, when he came to power in Germany in 1998, was determined
not to make the same mistake, and accepted, rapidly and with some gratitude, the resignation of his neo-Keynesian Finance Minister, Oskar
Lafontaine. He too came to see in European integration a substitute for
the ideal of social democracy in one country.
The progress of national economies was becoming inextricably bound
up with the international economy and the pressures of the global market.
Governments could no longer adopt national macro-economic policies
aimed at boosting demand, without risking punishment by the markets in
the form of higher interest rates and falling currencies. Tony Blair showed
that he understood this when, in his Mais lecture in 1995, he said:
We must recognize that the UK is situated in the middle of a global market
for capital a market which is less subject to regulation today than for
several decades.
An expansionary fiscal or monetary policy that is at odds with other
economies in Europe will not be sustained
for very long. To that extent
the room for manoeuvre of any government in Britain is already heavily
circumscribed.16
In addition to the constraints of the global economy, Britain, as a
member of the European Union, was subject to its trading rules and
to the provisions of the internal market. The European Economic
Community, forerunner of the European Union, had not yet come into
existence in 1956 when Crosland wrote The Future of Socialism; and Hugh
Gaitskell, Labour’s then leader, was, together with some of his leading
colleagues, such as Douglas Jay and Patrick Gordon Walker, positively
hostile to it, partly on the grounds that membership would inhibit the
16 Cited in Edmund Dell, A Strange Eventful History: Democratic Socialism in Britain
(London: HarperCollins, 2000), p. 568.
policies of economic planning to which a social democratic government
ought to be committed. By the time that Tony Blair became Labour
leader, however, Labour had become more pro-European than the
Conservatives. Indeed, Blair made it clear that he wanted Britain to join
the euro, an aim which he failed to achieve. Even outside the euro,
however, Britain was becoming subject to rules which would make it
more difficult to implement social democrat policies. The Lisbon
Strategy, for example, agreed to by the then fifteen member states of the
European Union in 2000, sought to achieve greater liberalisation of
European economies and a reduction in state regulation. That meant
further restrictions on the policy instruments available to a social democratic government. Indeed, it was fear of the extent to which the
European Union was adhering to a neo-liberal agenda that persuaded
many on the French left to oppose the European constitution and led to
its defeat in the 2005 referendum.
These developments made it difficult to see how the social democratic
value of equality could possibly be attained. For numerous studies had
shown that globalisation had the consequence of increasing inequalities
even within a single state, let alone between states. Globalisation allowed
a few to acquire massive financial rewards, while making life more
difficult for those without marketable skills. Many on the right, indeed,
argued that globalisation provided a new rationale for inequality. For if
the economy was to be successful, risk-taking and enterprise must be
given their just reward. Inequalities, therefore, could now be justified as
an inevitable consequence of the rise of global markets, the benefits of
which would eventually seep down to the poor. It seemed, therefore, as if
the trends of history were leading away from social democracy, not
towards it.
Moreover, while globalisation had increased inequality, it had, at the
same time, removed from national states those policy instruments which
they would need to use to redress those inequalities. These instruments
would now be forbidden by the rules of the European Union, the World
Trade Organisation or similar international bodies. In The Future of
Socialism, Crosland had deliberately confined himself to social democracy in a single state, ignoring problems of international trade and
finance. That had seemed a perfectly plausible assumption in the 1950s; it
had become totally implausible in the very different world of the 1990s.
The dilemma which these changes involve for social democracy have
been well summarised by Dominique Strauss-Kahn, a leading figure
on the French left, and a former minister in the Mitterrand and Jospin
governments. The success of post-war social democracy’, Strauss-Kahn
has claimed,
rests on the equilibrium between production and redistribution, regulated
by the state. With globalisation, this equilibrium is broken. Capital has
become mobile: production has moved beyond national borders, and thus
outside the remit of state redistribution – Growth would oppose redistribution; the virtuous circle would become a vicious circle.
The providential state has therefore been shaken. In these conditions,
the risk is strong that it will no longer be able to control the growth of
inequalities. Even worse, its disengagement at the precise moment when
the mutations of capitalism are causing the growth of inequality, could
lead the machinery of inequality to spin out of control.
Nevertheless, for Strauss-Kahn, the stance of the left must remain the
same. For ‘The Left is the agent of the permanent struggle against
inequalities. To guarantee a just society, it must renew its ideology and its
instruments in order to adapt them to contemporary realities. It must
found a modern form of social democracy.’17 Did Tony Blair succeed in
founding this modern form of social democracy?
III
A key social democratic response to the trends of globalisation has been
to argue that its central aims can somehow be achieved by a coordinated
social democracy operating at the transnational level. In 2001, Tony Blair
told the Labour Party conference:
If we follow the principles that served us so well at home – that power,
wealth and opportunity must be in the hands of the many not the few – if
we make that our guiding light for the global economy, then it [social
democracy] will be a force for good and an international movement we
should take pride in leading.
It is becoming natural for social democrats to argue that, although
social democracy may not be attainable at national level, it can be
achieved at European level through the European Union. The policy
instruments which are no longer available for redistribution at national
level might become available at European level. The implication clearly
is that the European Union could become an embryonic European
17 Dominique Strauss-Kahn: `What is a Just Society? For a Radical Reformism’, in Where
Now for European Social Democracy? (London: Policy Network, 2004), pp. 14, 16.
government, a government which might implement social democratic
policies at European level. That might perhaps have been possible in the
Europe of the six from 1958 to 1973, a Europe whose governments were
mostly Social Democrat or Christian Democrat, with a shared belief in
the virtues of state regulation and social welfare. It is, however, utterly
implausible in a Europe of twenty-seven member states which are at very
different levels of economic development, and contain a wide diversity of
ruling parties.
The fundamental problem is that the solidarity which is, as we have
seen, a necessary precondition for the success of social democratic policies of welfare and redistribution, is hardly present at European level.
Many supporters of European union, including European social democrats, hope that European institutions might create a synergy so as to
create a new sense of solidarity and new habits of working together, at
European level, so that a European government could somehow replicate
states and have policies imposed upon them which they did not support.
The parliamentarians of, say, France, with a government of the right,
would have to accept that social democrats were in a majority in the
Europe of twenty-seven member states, and could impose social democratic policies upon the French, which their national government and
their national voters have rejected. Such a condition only has to be stated
for its utopian nature to be recognised. Indeed, even within member
states, it is not easy to secure the support of members of subordinate
nationalities for policies decided by national parliaments. One important
motivation behind Scottish devolution was that the Scots resented being
in a permanent minority during the long period of Conservative government at Westminster between 1979 and 1997. The Scots were beginning
to see themselves not as a minority in the United Kingdom but as a
majority in Scotland. They would perhaps be even more upset were they
to be regarded as a permanent minority in Europe. It would, however, be
a consequence of social democracy at European level that Britain, like the
other member states, could have policies imposed upon her that her government and electors had rejected. Such an outcome is hardly likely to
prove acceptable. Social democracy at European level, therefore, is likely
to remain a pipe-dream.
If the aims of social democracy have been made vastly more difficult
of attainment because of the transfer of power upwards from national
institutions, these difficulties have been compounded by the transfer of
powers downwards to devolved bodies by the Blair government. As a
result of devolution, the non-English parts of the United Kingdom –
Scotland, Wales and Northern Ireland – now enjoy devolved government
and a high degree of autonomy in their domestic affairs. Devolution was
also offered to the English regions, but rejected by a four-to-one majority
in the first region to be offered it, the North-East, thought to be most
sympathetic to it, in 2004.
Devolution was a policy which Blair had inherited from John Smith,
and there are those who believe that he had little enthusiasm for it. Indeed,