Opposing Neo-Liberalism

The problematisation of the neo-liberal settlement has begun to slide us towards a paradigmatic shift in politics. This shift has been slow, and is still ongoing. Indeed, it is resisted by many, not least by European-driven austerity abroad and the Coalition’s squeeze on spending at home. Neo-liberalism, although arguably in decline, remains a beacon of light for British politics as much as it does in some quarters of Europe. [1] This is both surprising and concerning. It is surprising because it is the biggest crisis in confidence of the capitalist system for at least 80 years. It is concerning because it entrenches further economic inequalities and social injustices. Furthermore, the proponents of neo-liberalism have been able to reduce questions of (sustainable) economic prosperity and social justice to a simple cuts agenda. British politics is still guided by a specific ontological foundation of individualism and unfettered materialism. Both principles have pushed moral concerns and ethical dilemmas into the private sphere. It has hollowed-out the principles that underpin politics – debate, discussion and conflict – and replaced it with a logic of depoliticisation.

More urgently than ever before, we need an alternative to this agenda. The neo-liberal settlement emerged out of a number of dilemmas in public policy during the 1970s, ostensibly precipitated by the 1974 oil crisis. It took five years to turn academic theories (that existed as early as the 1940s) into policy ideas, and a further four years (at least) to cement neo-liberalism into a policy agenda under Margaret Thatcher’s leadership. [2]  1997 was a watershed moment because it recast the neo-liberal project and challenged many aspects of it. However, it was not able to challenge the fundamentals of the economic model based on individualism and insatiable consumerism. The centre-left was not anywhere near confident enough to challenge this agenda following the collapse of the left throughout the globe during the early 1990s. Furthermore, neo-liberalism was not problematised by a series of exogenous (and inevitable) dilemmas as it is today. Tony Blair and Gordon Brown therefore accommodated aspects of their communitarian governing project with neo-liberal concessions. [3] Having said that, New Labour did challenge the social settlement. It introduced a minimum wage, ensured nursery education for all three and four year olds, implemented a tax credits regime, invested in the NHS at record levels, brought peace to Northern Ireland and recognised civil partnerships. It corrected the excesses of neo-liberalism after-the-fact. It was patently not enough, but members and supporters of the Labour Party should be proud of what it got right in government.

The contemporary challenge for Labour is to offer an alternative that reaches beyond merely amelioration or accommodation with a discredited economic and societal model. Debates that had been buried under neo-liberal rhetoric have resurfaced, which means that the centre-left is able to expose some of its myths. The Policy Review under Labour’s Jon Cruddas has begun – although tentatively – to explore options that go beyond limiting the negative side-effects of neo-liberal capitalism. Ed Miliband himself has repeatedly called for a comprehensive re-think away from ‘irresponsible capitalism’ towards a more ethical capitalist system. Miliband has called himself a ‘responsible capitalist’. In his interview in Shifting Grounds he argues that ‘the way economies succeed is not by a few people at the top, but by supporting the many’ and that ‘unless you have the infrastructure that supports the many, government willing to reform the banking system to support the many, the skills system to support the many, the industrial policy, you’re never going to succeed’. A recent speech by Miliband highlighted that responsible capitalism has an agenda where companies pursue profit in tandem with an equal society, where power is in the hands of the many, and where citizens recognise responsibilities to each other. At a recent One Nation conference in London, Steward Wood, an advisor to Ed Miliband, built on this by calling for: ‘a different kind of economy, a determination to tackle inequality, an emphasis on responsibility (of the people at the top and the bottom), protecting the elements of our common life, and challenging the ethics of neo-liberalism’. [4]

Commentators, of the left and right, within Labour and beyond, have questioned much of the Policy Review to date. The Policy Review has come under hefty criticism for being slow, bulky and far from radical. This is, perhaps, because the review confronts the two most dominant traditions within the Labour Party – New (or Purple) Labour and Old (or Red) Labour. The two perspectives have dominated Party debates. Blue Labour, the new player of the game, does not have quite such prestige. And yet, this tradition opposes both the statism of the Old and the neo-liberalism of the New. Of course, the skirmishes between the three traditions are a sideshow, leaving the Policy Review to get on with its work rather calmly. Clearly, the problem is not that Labour is empty of ideas. Rather, the problem is that Labour has been too cautious to articulate its alternative vision for politics, society and economics – in part, no doubt, given the divisions within the Party about its future. However, it is time that Labour spells out its vision in unambiguous terms.  Taking the three headings of the Policy Review, Labour must go into a new direction and call for:

  • An ethical politics. Labour must reject the simplistic rational-choice individualism that has been a crucial foundation for neo-liberalism. The greed-based model has destroyed faith in politics. Power must be radically decentralised to local councils and regional assemblies. The liberal commitment to depoliticisation must come to an end immediately.
  • A fairer society. Passions over welfare reform run high, but Labour must be bold and challenge the divisive language espoused by many on the right. Labour must reduce inequalities by tackling our inefficient tax system and ensure that living standards lie at the heart of a Labour programme for reform.
  • Sustainable economic growth. The challenge for a sustainable recovery dominates public discourse.  Labour must re-balance the economy in a radical way – something that New Labour never dared to do. The real test, however, is the extent to which this is sustainable. Not simply in material terms, but environmental ones, too.

Some of these are in strong opposition to the Red Labour (statism versus localism) and Purple Labour visions (Keynesian versus Polanyian economics). [5] Crucially, many of the aims chime together. Challenging unfairness and inequality are things that have united all three shades of contemporary Labour traditions, which is why it must be at the heart of Labour’s governing vision in 2015. The Party leadership has failed to be bold in its critique of the status quo. This is somewhat perplexing, given the resounding support Miliband has received in the past for taking on vested interests. 2015 could be a watershed moment, if Labour wants it to be.

mg

[1] C. Crouch (2010) The Strange Non-Death of Neoliberalism, Cambridge: Polity Press.

[2] Thatcher was guided, for instance, by Friedrich Hayek’s The Road to Serfdom, originally published in 1944. The book itself led to numerous libertarian critiques of the welfare consensus.

[3] M. Bevir (2010) Democratic Governance, Princeton: PUP, p.130.

[4] For a summary of Wood’s speech, click here.

[5] See, for example, A. Finlayson (2013) ‘From Blue to Green and Everything in Between: Ideational change and left political economy after New Labour’, British Journal of Politics and IR 15:1, pp.70-88.

Pinning Colours to the Mast

It is now the middle of 2013, and we have surpassed the half-way point of this Parliament. David Cameron and Nick Clegg have presided over a turbulent three years with mainly negative evaluations (to put it mildly). We constantly hear of a crisis: within the Conservative Party, the leadership of Cameron has been rocked; within the Coalition, the relationship between the Tories and the Liberal Democrats is increasingly strained; and, within the Treasury, economic forecasts remain as bleak as ever. However, it would be misguided to call these ‘crises’. We are not in a crisis or even going from one crisis to another. We are in a period of social, political and economic malaise. We are faced with a breakdown of stability that has guided British politics for the past 30 years or so under a discredited banner of neo-liberalism. [1] Whilst this is going on, the Labour Party is hammering out its long-term response. In 2010, Labour polled just 29 percent of the popular vote, which understandably provoked a debate about what the Party stands for. Three years down the line, are we seeing a close to this debate? Far from it. Despite Labour’s lead in the polls, the electorate failed to endorse the Party in local elections. It seems that Ed Miliband’s leadership, although cemented, has yet to take a decisive turn towards a coherent governing project with which voters can identify.

Clearly, the Party’s debate is an internal one (at times, one could suggest add the adjective ‘parochial’). However, what is not often ignored is that Labour is made up of a broad coalition of forces that is far more nuanced than most people – Party members included – are willing to admit. The debate is not about Old Labour and New Labour. Both traditions are, without doubt, dominant in many discussions. However, it is possible to characterise many more strands, some of which overlap and some of which diverge radically. Some of these include: Blue Labour [2], Fabian statists [3], ‘Red’ Labour [4], Purple Labour (i.e., Blairites) [5] and Compass, all of which are informed by a proliferation of other ideational networks found in think tanks that include Demos, the Institute for Public Policy Research, the New Economics Foundation, the Resolution Foundation, Policy Network, and many more. [6]

These are competing traditions, and only one specific mixture can emerge out of this coalition of forces in 2015. If this does not happen, then the Labour Party will implode (much like the coalition within the Conservative Party at present). Not only are Labour traditions competing, they are also in opposition to one another, with high-flying accusations. Progress is often accused of a soulless neo-liberal approach to politics and economics. Those opposing austerity are accused of being nothing more than a ‘repository for people’s anger’ [7] or a ‘voice of protest’. The Blue Labour tradition has been attacked as ‘toxic’ and out-of-date. And statism is seen as ‘power hoarding’ that prevents empowerment of the people. Rarely have these attacks been constructive (as some of the examples highlight). It is true that some organisations have begun thinking about strategy, and others have come up with policy ideas. [8] But on the whole, numerous factions within Labour have become increasingly vocal in questioning the calmness of the Policy Review, from New Labour grandees to stroppy trade unionists. What is telling, and should reassure many, is that Ed Miliband is not willing to be pushed around by either New Labour or the trade unions. He is sticking to his own convictions to re-found the principles of the Labour Party in a holistic fashion.

Unfortunately, this is seemingly not enough as factionalism amongst student societies, at public meetings and across the Internet remains steeped full of emotive anger and frustration. Given this, in addition to the malaise facing politicians, it is now more important than ever that Ed Miliband and the Labour Party identify a governing project. [9] This is not about creating a credible economic alternative to the Conservative Party. This is about a vision for politics, economics and society. Without this, the electorate will not vote Labour into government.

One Nation Labour is the banner under which the Party will attempt to unite competing traditions at the general election. Yet few people know what this slogan entails despite the bourgeoning articles, speeches and conferences. Opposition to Labour – from all sides of the political spectrum – is united in calling the Party hollow. This is, perhaps, a curious accusation given that there are so many different centre-left traditions and networks identified above. This has been caused by the fact that the differing coalition forces within the Party and beyond have begun to set out their own appeals for the direction of Labour without fully engaging in dialogue with one another. We have seen the publication of The Purple Book by Progress followed more recently by a new website calling for a Campaign for a Labour Majority. [10] We have an alternative book called The Socialist Way (edited by Roy Hattersley and Kevin Hickson) outlining a statist, social democratic vision. [11] And finally, we have a trail of articles and speeches by Maurice GlasmanMarc Stears and Jon Cruddas that are united by an appeal towards Blue Labour that found their way into an ebook.

The factions within the Party have begun to cluster around these three reference points: Purple Labour, Red Labour and Blue Labour. All three are beyond the traditional Old and New divide that gripped Labour’s path to victory in 1997. [12] Yet it remains to be seen if any of these interact to form a winning formula. Peter Kellner has recently argued that the Labour Party faces a tough struggle to be viewed as a strong, passionate force, rather than a bunch of ‘nice but dim’ policy-makers. [13] The problem is that all three contemporary strands have offered little more than opposition, squabbling and futile accusations. We need to move beyond critique, and form a governing project. This was recognised as far back as 1945, in which the then Labour Manifesto warned: ‘It is very easy to set out a list of aims. What matters is whether it is backed up by a genuine workmanlike plan conceived without regard to sectional vested interests and carried through’. [14] Thus far, Ed Miliband’s leadership has been received with lukewarm interest, which has failed to combine the widespread opposition to the Coalition into a unifying vision. Is this the reason that Labour failed to make further inroads on 02 May? We have pinned our colours – blue, purple, and red – to the mast. The question remains whether that mast is a governing project worthy of the gauntlet One Nation.

mg

[1] C. Crouch (2010) The Strange Non-Death of Neoliberalism, Cambridge: Polity Press.

[2] M. Glasman et. al. (eds.) (2011) The Labour Tradition and the Politics of Paradox, ebook available here.

[3] See, for example, Y. Roberts (2012) ‘The Relational Reality’, Fabian Review 124:2, pp.7-8.

[4] R. Hattersley and K. Hickson (ed.) (2013) The Socialist Way: Social democracy in contemporary Britain, London: I.B.Tauris.

[5] G. Cooke et. al. (2012) The Purple Papers, London: Progress. Available here.

[6] Taking the issue at the broadest conceivable level, there is also a trade union movement that is ferociously against cuts, an Occupy movement that sought to emphasise the ‘99 percent’, and members of hard-left parties – the Socialist Party, the Socialist Workers Party, the Communist Party, and so on (ad infinitum?).

[7] T. Blair (2013) ‘Labour must search for answers and not merely aspire to be a repository for people’s anger’, New Statesman (12-25 April), p.27.

[8] See, for example, the articles in Fabian Review, 125:1, pp.1-30.

[9] R. Philpot (2013) ‘Remember Wilson’, Progress, pp.10-1.

[10] R. Philpot (ed.) (2011) The Purple Book, London: Progress.

[11] R. Hattersley and K. Hickson (ed.) (2013) The Socialist Way: Social democracy in contemporary Britain, London: I.B.Tauris.

[12] Although Old Labour and Red Labour are obviously linked, as are New Labour and Purple Labour. But importantly, both movements have moved on and re-articulated their visions given the 2008 economic crises.

[13] P. Kellner (2013) ‘Majority rules’, Progress, pp.14-21.

[14] The Labour Party (1945) Let Us Face the Future: A declaration of Labour policy for the consideration of the nation, London: Labour Party. Available here.

Supporting Olivia Blake

At the moment, the Youth Representative for the National Executive Committee of the Labour Party is being contested by two individuals, Bex Bailey and Olivia Blake. Both of them are leading great campaigns, and both of them have shown so much passion that I believe that both would make excellent Youth Representatives for the NEC. However, I wish to use this opportunity to write down some thoughts regarding the campaign, and specifically cite why I will be supporting Olivia Blake for NEC Youth Rep.

The National Executive Committee, or NEC, is the governing body of the Labour Party, which oversees the overall direction of the party and the policy-making process. The NEC is made up of a range of opinion formers within the party, which includes affiliate organisations, trade unions, MPs, MEPs, the Leader and Deputy Leader of the Party, and so on. Crucially, one position on the Committee is reserved for someone to represent all young members, which is one of the most important ways for younger members to be represented by the Labour Party at the national level. Moreover, the Youth Rep will also sit on the national committee of Young Labour, which is the governing body for the subsidiary of the Labour Party. In many ways, this is an important election, but particularly because 2013-2014 will be crucial in setting the foundations for the general election campaign that Labour faces in 2015.

Unfortunately, Young Labour has become laborious and elitist through a combination of complex governing rules and regulations in addition to limited institutional flexibility. One of the most important and pressing issues is that almost all elections are conducted through delegate systems, which means that only delegates get to vote for certain positions, including the NEC Youth Rep. This is hugely frustrating given that regional representatives are elected directly through one member one vote (OMOV). It kind of suggests that direct elections are not only possible in theory, but feasible in practice. An associated problem for the organisations is that communication in general is kept to the barest minimum – if existent at all. For example, information regarding how to submit motions, the locations of previous conferences, and the information for how to become a delegate was kept unclear, which meant that some Labour Clubs found it difficult to organise meetings in time to form proposals, pass motions and elect delegates.

These issues also faces Labour Students, and so both organisations urgently need to deal with them. Otherwise, they could damage the claim that YL and LS are democratically-run organisations. What we need at this time, especially for Young Labour, is a candidate that will open up the processes of decision-making to all members under 27s, which will ensure that the NEC is properly represented. It means that there should be a renewed emphasis on transparency and democracy. One of the ways to do this is to break the elitism that seems to have grappled Young Labour at the moment. This will ensure not only that the organisation is run more democratically, but also ensure a greater diversity of opinion will be heard, fostering further inclusiveness of Young Labour. This, in turn, will feed back into the NEC.

I believe that Olivia Blake is the strongest candidate for this change to happen. Olivia is unconventional in that she is not based in London and did not study the usual ‘Politics, Philosophy and Economics’ at University. Olivia goes to the University of Sheffield and she is studying towards a PhD in Medical Biology. This alone makes her a candidate that will offer a fresh perspective on policy-making, something that has been marginalised to an extent. However, it is not only her background that is impressive, but her entire manifesto. It is detailed beyond reproach, and many of the policies that she cites are ones with which I can identify. These are less about where we stand on the left-right spectrum, which is where we potentially differ. However, we are united in our insurmountable appetite for reform of the structures that govern Young Labour (and, by extension, Labour Students). Some of her excellent policies include:

  • Guaranteed reports to members to ensure that communication and transparency is upheld. This is such a simple, useful policy that I cannot believe it has not been implemented before. I can’t remember when I last heard anything – if ever – from the current national committee, or the NEC Youth Rep for that matter.
  • Feedback sessions in every region of the country to ensure that all young members feel represented. This is another great policy because it will challenge the idea that YL is just based in and around London. It is true that regional Young Labour organisations do exist, but communication between them and the national organisation is not particularly strong or co-ordinated, at least not from where I’m standing.
  • Reform of youth elections to ensure that, in future, all young members get a direct vote in who represents them at the NEC and YL level. This is the bedrock that should sit at the apex of Young Labour. How is it that, in the twenty-first century, we are still electing positions using a nineteenth century system for a political party that is supposedly all about democracy?

These are just three policies that I’ve cited. Her full manifesto is available here. There are so many other things that Olivia wants to achieve that make her a good candidate for reform – including a women’s network, regional liberation groups, more communication online, opening up Young Labour events, and so on and so forth. I’m very proud to be a supporter of Olivia.

Olivia has been a campaigner for Labour for absolute ages, and tirelessly fought the corner for women’s rights, social justice and equality for as long as I can remember. Without doubt, Olivia has been inspirational in many ways. She was the person that gave me the courage to go door-knocking for the first time for the #labourdoorstep and encouraged me, advised me and helped me a great deal since I’ve met her in 2008. Her passion could never be doubted, for Labour in particular, and life in general.

I proudly support Olivia Blake for NEC Youth Rep.

mg

Labour and the EU: From realpolitik to principle?

Since David Cameron called for a referendum on Europe, it would appear that the issue of Europe has subsided somewhat. And yet, there is a distinct danger that the approach taken by the Prime Minister’s opposite number, Ed Miliband, is beginning to create antagonism within Labour. Cameron’s referendum pledge means that the position of the Labour Party towards Europe has been questioned – to such an extent that it is possible that the issue could damage the Party’s electoral chances. This is because Labour’s position is based on realpolitik, not principle. At a time of intense debate about the very nature of the European Union, it is more important than ever that a Labour policy based on principle, as opposed to pragmatism, comes to the fore. First, however, it is worth teasing out why a tension could emerge within the Party.

Let’s rewind time back to the 1960s. The UK was not part of the then European Economic Community, having been snubbed by a veto courtesy of the French. The Labour leadership was not unhappy about this because it saw the EEC as nothing more than a ‘capitalist club’. In 1962, the Leader of the Opposition, Hugh Gaitskell, exclaimed that a federal Europe would mean: ‘the end of Britain as an independent European state, the end of a thousand years of history!’. [1] For Labour, what was at stake here was more than just national sovereignty. Rather, the Party argued that the EEC would further the interests of capitalists alone. For those reasons two reasons, Labour fought for a ‘no’ vote on Europe in 1976, and opposed Margaret Thatcher’s support for the EU in the early 1980s. However, as the 1980s drew to a close, the Conservative Party and the Labour Party switched position. The European project turned emphasis away from a common market, which would be fully implemented by the early 1990s, and instead emphasised pan-European welfare, including employment rights and a commitment to a better standard of living. The Labour Party looked across the Channel and saw that in mainland Europe broadly left-of-centre policies flourished. At this point, Labour opted to support the EU because it has economic and social benefits for the UK. [2]

Back to 2013, and the orthodox Labour support for Europe has come under significant pressure. The pledge by David Cameron to hold a referendum on the EU has caused an EU-induced schizophrenia: first, Ed Miliband rules out a referendum on Europe; second, Ed Balls makes the opposite claim. This confusion suggests that Labour needs to rebuild its strategy on Europe. Most importantly, and probably uncomfortable for some, Labour must call for a referendum on Europe. Once it has done this, Labour will be able to shape the agenda on the future of Europe by asking two questions:

1. What should Europe stand for? There are three principles:

  • Democracy. European democracy should rest with the European Parliament, on the one hand, and a European President, on the other hand. This would ensure national representation through two input-based mechanisms. The EU must do more than preach democracy, it must begin to practise it too.
  • Economic and Social Prosperity. One of the overriding positive impacts of the EU is that it will help to stimulate national economies. This is the major output-based mechanism that needs attention. The EU must be able to do less on a European-wide level, and support national economies instead. For this reason, Ed Balls and Douglas Alexander were right to call for a real-terms cut in the EU budget. The EU should become an association of national economies that supports employment rights and better living standards.
  • Subsidiarity. Power must be devolved to the most local institution possible. This goes to the heart of democratic power and also remains a prerequisite for economic prosperity. This is because it will give European peoples a sense of ownership. All of this means that the EU become multi-level and multi-sectoral – a dynamic system that sees clusters of shared policy-making.

2. How can these principles be implemented? Here are some specific policies:

  • Democratic powers must be based on a directly elected president for the whole of the EU; but the European Parliament should become the sole initiator of European legislation (exceptions would be inter-governmental treaties to be scrutinised by national parliaments).
  • The overall size of the EU needs to be slimmed down through a smaller Commission; the removal of the European Common Agricultural and Fisheries Policies (CAP and CFP respectively); no more moving back-and-forth from Strasbourg and Brussels; and a salary freeze for MEPs and bureaucrats. This will allow for a real-terms budget cut.
  • Resources should support national economies and protect employment rights – this could include a guarantee of apprenticeships, placement schemes and more. This is hugely important to develop cultural and economic ties throughout Europe.
  • To safeguard subsidiarity, we need a more powerful Conference of European Affairs Committees (COSAC), which would meet more often to hold EU decision-makers to account. The UK Parliament should establish a Parliamentary Committee on Europe that brings together MPs, peers and UK MEPs to debate EU issues of major importance. It would be accountable to the UK Parliament, but also send representation to the EU.

This is what Labour must stand for. It must ensure that the principles given above remain at the heart of the European project in order to pave the way for a new European settlement that calls for a slim, dynamic association of national economies and not for a corpulent, bureaucratic union.

mg

Notes

[1] M. Charlton (1983) The Price of Victory, London: BBC, p.274.

[2] I’ve drawn this analysis from a BBC podcast by Analysis, called ‘Labour, the left and Europe’ (29 October 2012).

Should Labour call a referendum on the EU?

Please note that this article was written for, and originally appeared in, Left Foot Forward, which describes itself as a ‘political blog for progressives’. The article was published on 07 January 2013, and is available here.

This month marks the fortieth anniversary of our membership to the European Union. Forty years on, and the UK has come to a crossroads with its relationship towards Europe. As the Conservatives are becoming increasingly outspoken about their distaste with the European project, it is time for Labour to confront the challenge of the EU. But, in addition to driving positive, constructive change at the heart of Europe, Labour must acknowledge that a referendum on the EU has become inevitable – even if this is many years away.

There is, of course, considerable contention of this point, and some argue that a referendum should not be called. The most cited argument is that a referendum could lead to a British exit of the European Union. This is not an argument against a referendum; it is an argument against democratic choice. It is true that referendums, in general, should be called sparingly and cautiously because they are not an effective resource in a diverse representative democracy such as the UK. However, to say that a referendum could lead to a result that you do not like is not valid. It’s called democracy.

So, why is a referendum needed? The most obvious point is that it will give the British public a choice in its support of Europe. The British want a referendum, so it is only fair and democratic to give them one. The European Economic Community (EEC) has been fundamentally transformed since the 1970s. It is now a European Union of 27 countries, with a wide range of institutions and decision-making powers. Moreover, over the coming four to five years, we will begin to see a new European settlement of powers. The unprecedented changes since the 1970s imply that the British public need to be given a choice in a reformed relationship with the European Union. The fundamental point is that a referendum on Europe will allow the British public to have a frank and open discussion about Europe; it will settle our membership for a generation. This point is particularly important because it underpins what politics is all about: debate, contestation, argument and persuasion. Europe remains a hotly contested issue, and it needs to be confronted directly. The spectre of Europe will haunt British politics until a referendum is called. [1]

This raises the issue about timing. There is an argument that, if a newly elected Labour government calls for a referendum, and loses, it would destroy a left-of-centre government, and plunge the entire party into a crisis. The government would probably fall. This argument, raised by David Clark, is indeed very powerful. This is a plausible scenario, but it rests on the assumption that a referendum would occur in 2016, which is not likely. It is many years away because a reform of the European Union will take as many years. We cannot vote on Europe before it has settled itself; it would give us more questions than answers. In order to give the British people a genuine choice in Europe, we must wait (i) until the Eurozone crisis is well and truly over and (ii) until a range of reforms of the EU have been implemented (reforms that would make the EU more democratic, economically rigorous and so on). Once both of these have been consolidated, it will be possible to call for a referendum. The new European settlement will not crystallise until some point in the next parliament, i.e., between 2015 and 2020, and more importantly, it will be more likely to occur in 2018 or later.

In the next five years, the Labour Party must make the case, first, for a reformed European Union, and second, for British membership of that Union. As described previously, Labour should use the growing momentum to call for a Convention on Europe’s Future, in partnership with other European political parties and leaders. A set of pan-European reforms is desirable across the continent. Once these have been agreed, it will be time for an in/out referendum.

A reform agenda for Europe, with a referendum attached at the end, is the strongest case that a pro-European government should make, and one where a ‘yes’ campaign can win. YouGov analysis has shown that, whilst the public currently seem to favour withdrawal, this is not very clear if the EU is reformed. Indeed, there is a strong case to be made for Europe. A frank and open discussion will re-focus debate away from the often superficial eurosceptic – or perhaps ‘eurocoward’? – arguments in favour of the more considered pro-European arguments. Pro-EU sentiments will not appear by magic: they must make a case for Europe that has been crowded out by a vehemently Eurosceptic media. Is it possible to make such a case? There is precisely such an opportunity, and pro-Europeans should not be afraid to make it.

Let’s take the case of the eurocowards: They believe that the British cannot cope with political engagement; that we do not have the strength to carry the European ship. They believe that we have nothing to offer to Europe and that we are better off hiding alone. Here is the vision of the eurocowards: an offshore, de-regulated tax haven which would be a pole for free enterprise in a global race. Could anything sound more preposterous? Pro-Europeans must argue that we can (and, more importantly, should) have a constructive relationship with our neighbours, and that we can lead the European project. Pro-Europeans must make the case that Britain has something to offer Europe just as much as Europe has something to offer the UK. Whereas eurocowards want us to play no part in the world, we believe in stepping out into the world and playing a part in it. Of course, there are choices to be made. The British public must learn that it cannot free-ride on the economic benefits of Europe without any commitment to Europe. That is not to say that pooling our resources cannot play to our benefit, as analyses do show.

So, should Labour call for a referendum on the EU? Yes, it should. But this referendum cannot take place immediately. Ed Miliband should take leadership of the debate by accepting a referendum for the end of the next parliament, which will (i) settle the question of a referendum and (ii) allow the EU to be given a chance to reform itself. Until then, the British political elite must play a constructive part in shaping its European future.

mg

Notes

[1] There is, of course, the added tactical reason that is often touted: it will split the Conservative Party and marginalise the influence of UKIP. I’m not sure these tactical reasons are particularly valuable: former UKIP voters are likely to return to the Conservatives; and the Conservative Party could just as much unite as divide over Europe.

The Living Wage: Supporting living standards, economic prosperity and consumer freedom

The Living Wage Campaign is a laudable campaign that seeks to protect and strengthen employee rights. The LW will be a key factor for economic recovery and crucially helps to re-balance our economic system in favour of the citizen. A decent, living wage has three positive claims: first, it rests on a moral claim that people should not be treated as cheap commodities; second, it rests on a economic claim that it will increase growth through greater consumer spending; and third, it rests on a political claim that will allow citizens to spend their money more ethically.

Living Standards

The Living Wage Campaign was founded on the principle that work should be rewarding, and that it should bring dignity. Consequently, wages should be enough to provide families the essentials of life. [1] The campaign has roots that go back to the late nineteenth century, where one MP wrote: ‘A living wage must be sufficient to maintain the worker in the highest state of industrial efficiency, with decent surroundings and sufficient leisure’. [2] A living wage is important because the minimum wage is not enough for a sufficiently comfortable life in the twenty-first century. This is not about luxury, it is about protecting living standards:

  • The Living Wage has had a colossal effect on reducing in-work poverty. Since 2001, over 45,000 families have been lifted out of working poverty, directly as a result of the LWC.
  • Relatedly, the LW contributes to a reduction in fuel poverty. A living wage would cut the horrifying situation where people have to choose between their radiator and their dinner (especially at a time when fuel bills are going up).
  • The LW is about increasing the health of employees. A higher wage means less stress, and could ensure that the money is spent on better quality food, goods and services (with obvious health benefits).
  • Being paid the minimum wage prevents parents from seeing their children at weekends because they end up with two or three jobs to make ends meet. The LW intends to end such a situation, ensuring hard-working parents’ strain is eased through wage security.
  • Better living standards will have an effect on the economy: a happier, healthier workforce will lead to higher productivity, fewer ‘sick days’ and a greater sense of social cohesion. The modest effect that the LW will have on reducing inequality is vital. [3]

Economic Prosperity

The last three bullet points of the above section have already hinted that the Living Wage plays an important part in prosperity. This is something that goes beyond the individual level, or as the Mayor of London puts it: ‘Paying the London Living Wage is not only morally right, but makes good business sense too’ (quote from LWC Website). Independent studies have shown that 80 percent of employers believed that the LW increased employees’ quality of work, and absenteeism decreased by approximately 25 percent. Two thirds of employers reported a significant impact on recruitment and retention within their organisation. 70 percent of employers felt that the Living Wage had increased consumer awareness of their organisation’s commitment to be an ethical employer. [4]

The benefits for the economy are important for the macro-level too. Higher wages allow for greater consumer spending. Workers’ spending on consumption accounts for roughly half of GDP in advanced economies. Lower wages means less spending, and hence less demand for economic output. Unless this is more than offset by new investment or exports, total output will contract as a result of a wage cut, and employment will fall. [5] Unfortunately, the UK is not export-focused. Combine that with government cuts and decreases to global investment, and we have stagnation in economic output (enter the double-dip recession). A Living Wage could counter some of these negative effects.

Citizenship

Ultimately, giving the employee more economic power can only be a good thing. A massive problem for the low-paid is that their choices, in economic terms, are diluted. They are forced to shop in the cheapest possible places, without any regard to the ethical or moral outcomes. Plenty of people do not buy goods with a Fairtrade mark simply because it is more expensive. Should our moral and ethical choices be limited because we are paid less? No. [6] I am not saying that we should all be paid enough so that we can go to Waitrose, or that everyone should buy free range eggs. But surely there is a problem if shoppers buy unethically because they are paid unethically?

A link between ethical consumption and the LW definitely exists. The LWC is not just about individual changes to eating more healthily, but also about wider societal efforts to create a more ethically-balanced economy. Higher wages means that spending power of the consumer could be directed towards more ethical goods – precisely those Fairtrade, free range and environmentally-friendly products that cost marginally more. Wages affect attitudes to shopping. As one commentator puts it: ‘spenders of the world, unite!’. [7] The LW could enhance exactly this sort of behaviour to create a more ethically-based capitalism.

Fighting For A Living Wage

A living wage has unparalleled benefits for living standards of employees, benefits the economic growth of this country, and can ensure that citizens become more active in their consumer choices. There are other reasons for introducing the LW. One is that it would reduce the need for taxpayers to effectively subsidise employers who pay their staff too little, because state benefits, such as working tax credits, would be reduced.

It is hugely misleading to say that the Living Wage would ‘kill business’. For most businesses – and especially in banking, IT and construction – implementing the LW would represent less than a one percent rise in overall costs; in other industries the costs are a few percentage points higher, but a phase-in could mitigate any harms. [8] Indeed, one way to increase the take-up rate would be to offer tax-cutting incentives to small- and medium-sized businesses for introducing a living wage.

Analysis has also shown that simply reducing income tax rates – touted as one alternative to the LW – is poorly targeted and cuts the British tax base even further, which would perversely increase debt (cut income tax but pay tax credits equals higher debt burden).

For all those reasons, I’m very happy that the Labour Party has announced its unequivocal support for the Living Wage and that Sheffield Labour Students supports this campaign. I’m also proud to support the Living Wage Campaign in Sheffield more generally. And I’m more than happy that Sheffield City Council will introduce a living wage for all its staff.

mg

Notes

[1] D. Hirsch and R. Moore (2011) The Living Wage in the United Kingdom, London: Citizens UK, p.4. Report available here.

[2] Ibid., p.4.

[3] For instance, see R. Wilkinson and K. Pickett (2009) The Spirit Level: Why equality is better for everyone, London: Penguin.

[4] These figures are drawn from the Living Wage Foundation. Click here for more details.

[5] J. Stanford (2008) Economics for Everyone, London: Pluto Press, pp.158-9.

[6] One very interesting example of this in action was Hugh Fearnely-Whittingstall’s Channel 4 three-part documentary, Hugh’s Chicken Run, from a few years ago. Here, local residents learnt about free range chicken, but some residents simply could not afford to eat ethical chicken – even if they wanted to.

[7] D. Jeffery (2012) ‘A Call to Arms: Spenders of the world, unite!’, Canvas 3:6. Article available here.

[8] M. Pennycock (2012) What Price a Living Wage? Understanding the impact of a living wage on firm-level wage bills, London: IPPR. Report available here.

The Tragedy of European Union

For someone with a German heritage and who regards himself as a social democrat, it is with a heavy heart that I have become sceptical about the future of the European Union. Europe is a place very close to my heart – the cafe culture, the sense of shared values and epistemic communities, the diverse range of identities, the beer, the excellent little patisseries and bakeries (just food in general really) are truly wonderful European things. In other words, I love Europe. But I believe that the dream of European Union leaves me, more and more, with a sour taste. This is particularly soul destroying given that, around 14 months ago, I was full of enthusiasm about a closure of the EU’s ongoing crises. That enthusiasm has waned, and no one has taken up European leadership like I had hoped.

Right now, there are two colossal problems facing the EU: first, the eurozone crisis, which has spiralled out of any proportion imaginable. Second, any sense of democratic input to decision-making has withered away. In other words, the input legitimacy of European institutions and the output legitimacy of European policy-making have vanished, which have turned the EU into an illegitimate beast. [1] Here’s some more depth:

  • Output Legitimacy. The output policy-making role of the EU has not worked. People are usually relaxed about the authorities so long as they do their job well. The EU, however, has spectacularly failed, which means that the preferences of European populations have not been enacted. Ergo, there is an output-based legitimacy deficit. It is not just that the Euro has been a disaster: the Common Agricultural Policy is uncompetitive, the Common Fisheries Policy has culled fish stocks, and bureaucrats are wasting huge resources by travelling to and fro from Brussels to Strasbourg (for not doing all that much). These are just three examples of many. Policy-making in the EU is simply not working.
  • Input Legitimacy. Mario Monti in Italy and Lucas Papademos in Greece were both installed as heads of government without being elected. These are very stark examples of how the European Union has undermined the principle of democracy. The European Commission (EC) and European Central Bank (ECB) have also imposed austerity measures on other governments, such as Portugal and Spain, without a sense of accountability. Unelected leaders have begun to govern across the continent. So, the contribution of the demos to policy-making (through elections) has been destroyed, which has caused an input-based legitimacy deficit.

Using the idea of legitimacy shows us how deep the problems of the European Union have become, and tells us something troubling about its future too. Current reform proposals do not intend to increase input legitimacy, but rather hand more power to the ECB. Furthermore, the discourse of ‘austerity’ and ‘marketisation’ (that has until now failed to work) is still a course that the EU is pursuing regardless of its consequences. The crisis is going to get worse. The dream of a European union has turned into a tragedy, which leaves us with two options: either the EU must be dismantled, or the entire system must be rebuilt from scratch.

The big question is this: what should Europe be for? The European Union has achieved a great deal, not least safeguarding peace and ensuring economic growth through the single market. It has added to the global power of all member countries through the EU as a trading bloc at the World Trade Organisation, and made an impact on joint foreign policy initiatives. Finally, the EU encourages the spread of democratic values, at least in principle, through the European Neighbourhood Policy (ENP). These values should be maintained, but the priorities must change. First, the EU needs to do more than preach democracy, it needs to practise it. Some examples include a directly elected president, a Commission drawn from the European Parliament, and the EP itself to be given more powers. Second, the EU should be guided by two policy-making principles: economic prosperity and subsidiarity. This means that the single market must be protected and the EU budget must be reformed – far less money must go to the CAP and other protective measures. Instead, the EU should provide investment for national economies and support the spread of knowledge (fostering apprenticeships, training, university funding, and so on). These two areas of reform point to one thing: a looser relationship between its members. We must turn away from ‘union’ towards a ‘partnership’. The EU must be governed democratically, through a consort of a president and strong EP, and its focus must be economic growth and educational investment. If the EU cannot reform itself into a democratic, economic centre, then it is doomed to fail and its members should consider a hasty leave.

At this point it is worth mentioning the British angle. British interests are closely linked to that of the European market: it accounts for 54 percent of British export alone. This means that we have a clear interest in shaping European institutions. Additionally, Britain benefits hugely from the bargaining power of the EU trading bloc at the WTO, and even in other areas of foreign policy. To go it alone would risk marginalising British influence on the world stage – politically and economically. As David Clark summarises very well: “Britain will stand little chance of remaining influential at a global level if it cannot be strong and influential in its own neighbourhood”. [2] Ultimately, there is no halfway house with the EU, although this is always something that Britain has craved. [3] Britain needs to take a decisive step and, whilst I’m probably being naive, I have hope that the United Kingdom can take that decisive step to lead Europe – because sitting in the ‘EU waiting room’ has become untenable, and leaving the European project would be an act of national defeatism.

There are three key things that must happen. First, the European project must be democratised, which means that the EU must ‘slim down’ its priorities and reinvigorate the principle of subsidiarity. Second, policy-making must move away from neo-liberalism towards decentralisation and fostering equal opportunities. Third, and most importantly, EU members must be given a referendum on membership once the new constellation of decision-making has been settled, no sooner or later. The combination of these three things are the last chance that the EU has to become a legitimate focal point for democracy and economic prosperity. If the EU fails on this, then I would prefer for Britain to leave the EU (and, indeed, for the entire project to take the final bow). [4]

mg

Notes

[1] Legitimacy here is based on Fritz Scharpf’s definition of: i) input legitimacy as reflecting the will of the people, derived from their authentic preferences and a sense of proceduralism, and ii) output legitimacy, which means that political choices are legitimate if and because they effectively promote the common welfare of the constituency in question. See F. Scharpf (1999) Governing in Europe: Effective and Democratic?, Oxford: OUP, p.6.

[2] D. Clark (2012) ‘Labour’s Next Foreign Policy’, in J. Denham (ed.) The Shape of Things to Come, London: Fabian Society, p.111.

[3] A. Gamble (2012) ‘Better Off Out? Britain and Europe’, Political Quarterly 83:3, pp.468-77. Also, anyone know current policy on the EU? It’s all very confusing with the government: first Cameron vetoes policy proposals to save the EU, then Osborne demands action to save the euro.

[4] These are some hints as to the future direction that the Labour party must take when they are thinking about their stance on Europe. It does not pay to call for EU budget cuts only to humiliate David Cameron – Labour must spell out an alternative, and this little article hopes to show one way towards a social democratic alternative.