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Labour supporters are deserting Gordon Brown |
Brown must go back to old Labour roots
The economic downturn requires a radical policy rethink and could mean the end of neo-liberalism, writes Bernie Moss
LABOUR supporters are deserting the party because of feelings of insecurity in the face of higher food and energy prices and the deepening economic crisis.
That was the conclusion of a poll done by the British Election Survey before the May 1 elections. There are other reasons. Since 1996, New Labour has focused on winning the few thousand or so swing middle-class voters, especially in the South, at the expense of its traditional working-class base. The elimination of the 10 per cent tax band benefiting the working poor by Gordon Brown triggered the recognition that New Labour, contrary to its rhetoric, was more attached to the rich than to the poor.
Finally, supporters lost faith in the leadership of Brown because of his dithering and copying of Tory initiatives.
The economic problem is the most intractable. It will not be solved by the new initiatives announced by Brown: shared government equity with first-time buyers, more flexi-time for working women and the end of fines for recycling delinquency.
It requires a total reversal of New Labour policies and, in the event of a deep and protracted depression, a return to Labour’s founding principles, indeed even the dinosaur called collectivisation.
Brown assures us that we are better-placed than the Americans to resist the crisis because of his tough decisions as chancellor on inflation and debt. But the experts, Alan Greenspan, former head of the American Fed, the European Commission and the G8, say that Britain is more vulnerable than the US because of our reliance for growth on financial and housing speculation and financial and business services, the first casualties in a crash, and little on domestic production, the only way to a recovery.
Britain and the US have always been financially inter-dependent with similar structural weaknesses today. They have accumulated huge sums of personal and mortgage debt, which has vastly increased the amount of money and credit for bankers and hedge funds to play with.
Household debt is greater than our GDP; household saving is at a 50-year low of 2 per cent income. The crisis of sub-prime mortgages in America has caused huge losses for world-class banks and a credit crunch for all sectors. The stage is set here for a long-term decline in housing prices and economic downturn with growing unemployment.
Brown is not responsible for the world slow-down, but his acceptance of the neo-liberal rules governing globalisation has made recession or depression more likely here: the 2 per cent inflation limit, which kept the pound over-valued in trade and constrains recovery, the hands-off attitude towards manufacturing, which has lost almost half its percentage GDP and a million jobs on his watch, the promotion of home ownership, which has almost tripled in price five times the average income, and endless spin about the end of boom and bust, which actually fuelled speculation and left us unguarded.
To win back traditional supporters and soften the effects of the down-turn Labour must reverse these policies with more flexible and lower interest rates, the ditching of self-imposed and EU limits on public deficits, debt and inflation, state aid to banks and industry, also contrary to EU rules, higher wage settlements this year for public employees, the construction of social and affordable housing, tax redistribution from the rich to working people and, as the American democratic candidates have suggested, a temporary moratorium on paying higher interest rates and mortgages.
There are limits to spending our way out of a recession because of our trade dependency on other countries and the world spike in food and energy prices.
If the recession turns into a depression on the scale of the 1930s we may be forced to restructure our economy along the lines advocated by Labour’s founders, meaning collectivisation, managed trade and planning.
They believed that the capitalist market system was not only unjust because it engendered social inequality, but was also anarchic, unstable and destructive, periodically producing crises of production and unemployment.
The coming crisis will destroy faith in neo-liberalism and radicalise opinion. Recovery may demand much more radical solutions in a different world than is imagined today.
• Bernie Moss is author of The EU as Neo-Liberal Construction
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