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Home Opinion Can a modern ‘Left populism’ rescue social democracy?
Progressive • Populism • Public Interest

Can a modern ‘Left populism’ rescue social democracy?

Roger Liddle - 17 October 2013

Speaking for the ‘public interest’ against all forms of ‘special interest’ can be vital in cutting through modern day contempt for the political class – but ‘Left populism’ must not come at the expense of economic credibility

Social democracy is still in trouble, everywhere in Europe. In September German social democracy suffered its second worst defeat since 1945. A week later the Austrian general election saw further confirmation of the decline of the Social Democrats, once the party that proudly dominated Austrian post-war politics, now barely capable of scraping together - with the help of the mainstream centre-right party - 50% of the vote in order to renew their grand coalition.

There has been no leftward turn in European politics despite the Global Financial Crisis, and the devastating facts of market failure that it demonstrated. The hopes of those who decried the Third Way politics of the 1990s, and convinced themselves that this would mark the moment when a more traditional social democracy might once again emerge triumphant, have been dashed. In the age of austerity, electorates seem more comfortable with the centre-right and are suspicious of social democratic promises, based on a Keynesian rationale, that they can engineer a faster return to growth. Voters don’t like tough times, but they appear grudgingly to accept them.

Yet at Labour’s Brighton Conference, Ed Miliband behaved as a man determined to defy this pessimism and break out of the European social democratic cycle of defeat and decline. This article assesses prospects for the new ‘left populism’ he boldly launched. It argues that Miliband is right that a new political style is necessary to cut through the public’s massive cynicism with conventional politics. However, to succeed electorally, his ‘pledges’ will have to ‘add up’ convincingly in themselves. They will only be persuasive in the context of a party that is judged in general terms to be economically competent. And Labour will only occupy the vital political centre ground if Labour avoids any impression of a return to the ‘us’ and ‘them’ politics of the past and instead couches its approach in terms of speaking for the ‘public interest’ against all forms of ‘special interest.’ On all these points, Labour still has work to do.

A defining speech for Ed Miliband

First of all, the positive points of the intervention. As many others have noted, Miliband’s speech was a remarkable ad-libbed ‘tour de force’, quelling the rumblings of discontent with his leadership that had surfaced in the newspapers over the summer break. It also marked a new political style. Previously his speeches had been conceptual – outlining his ideas for ‘responsible capitalism’ and ‘One Nation’, rather in the mode of a Fabian lecture.

His speech did three things:

Firstly, it contained an analysis: the changing structures of global capitalism can no longer be relied upon to deliver broad based prosperity, even with the return of some economic growth. The combination of increasing returns to talent, the impact of the widening global labour pool driving down the wages of the lower skilled in developed countries, and the skewed distributional consequences of financialisation, all give credence to this argument.

Secondly it attempted to redefine the political challenge facing Labour and the country. The Conservatives have framed the political debate around an austerity facing all of us to which there is no alternative, Miliband sought to reframe this on the squeeze on middle incomes and the “cost of living crisis” that “hard working families” face. His argument is that despite the harsh realities of austerity, a Labour government could act to ease that crisis in a way the Conservatives won’t, because they will always defend the interests of the rich and big business.

Thirdly, he demonstrated the seriousness of that intent with a totemic policy pledge that an incoming Labour government would freeze energy prices for twenty months while pro-competition reforms are made to the energy market, preventing the six big businesses that dominate domestic electricity and gas supply ‘ripping off’ consumers.    

‘Left populism’ as a response to contempt for the political class

In the ‘Amsterdam process’ of rethinking social democracy that Policy Network conducted after the 2010 election, we debated in depth with our Dutch colleagues the profound alienation from all established parties that our publics feel and whether one way to address this might be through a more populist political style.  I have no doubt this alienation is deep. I came literally face to face with it in the hundreds of conversations I had on the doorsteps of Wigton, a working class market town of 5000 voters which I won from the Tories in the Cumbria County Council elections this May. Many think our society is ‘unfair’ but the Left deceives itself if it thinks there is massive public anger against rising inequality and the ‘rich’. Attitudes are much more complex. No one will defend ‘bankers’. But in middle Britain feelings of unfairness are as much, if not more directed against immigration and perceived welfare abuse, as they are against any upper class elite.
Among the ranks of the less well off, among the younger low paid, lone parent families, and people with disabilities, many have long given up on the idea that their vote could make a difference. Only working class pensioners and older working class women remained steadfastly loyal to Labour. What undoubtedly exists is significant resentment - bordering on contempt - for the established political class, which includes not just “the Tory toffs”, but the past and present Labour leadership.

This has led directly to the strength of the UKIP ‘bubble’. It is an error to take comfort in this on the grounds that UKIP is taking more votes than the Tories than from Labour: their appeal is particularly strong among later middle aged, mainly male, working class voters with decent jobs – many of whom would have happily voted for Labour in 1997, 2001 and even 2005, but deserted the party in droves in 2010. There is not much sign of them coming back: to the extent  Labour has picked up support, it is typically amongst people who voted Lib Dem in the last general election, particularly among the weak party identifiers in the politically volatile and socially fluid classes that make up modern ‘middle Britain’.

Despite the unpopularity of the Coalition, the Conservatives have been brilliant at playing the populist politics of our times. George Osborne’s £26,000 a year ‘benefit cap’ is a high profile gesture that was seen to be ‘curbing welfare’, even though the cost savings from it are small in practice. He knew the unrepresentative lobbies would force Labour to oppose it, while many Labour inclined voters with jobs would react in exactly the opposite way, as typified by the common reaction: “if someone offered me that money, I’d be laughing all the way to the bank. I have to get up at six o’clock every morning and I earn less”. In this environment, social democratic parties face a huge challenge in making themselves relevant. They have to develop their own political currency of credible populism.

In Brighton on full display was a new politics of ‘Left populism’: not of course the nasty xenophobic populism that appeals to people’s worst fears and instincts on issues such as immigration and welfare abuse, but a populism nonetheless that makes promises that relate to people’s everyday lives, addresses the huge sense of unfairness they feel, and offers a remedy people can grasp hold of and understand. UKIP may try to scare people with fanciful stories of how twenty million Romanian and Bulgarian migrant workers are going to steal British jobs, milk our welfare system and swamp the health service. The Tories can play the politics of the ‘benefits cap’  for all its worth and send advertising vans offensively around the most ethnically diverse parts of Britain urging illegal immigrants to come forward in order to be sent back home. Labour’s new Left populism will call time on the abuses of the energy bosses who are ripping off British families for the benefit of their bonuses and shareholders.

Avoiding the credibility trap

The Labour leadership believes it has at last won definition. Although there has been no dramatic change in Labour’s position in the polls, at least people now understand what the party is about: doing its best, in a practical and realistic way to help hard working families whose living standards have been under squeeze for five years or more, to meet rocketing energy bills they have little alternative but to pay. 

However, this new tactic will only work on certain conditions.

Firstly, the pledges have to be credible in their own terms. The right wing press has predictably been apoplectic about Miliband’s proposed market intervention as a ‘return to socialism’. The superficiality of that argument was exposed by the back-bencher who asked Prime Minister Cameron why, if it is legitimate to intervene in the mortgage market through ‘Help to Buy’ to enable young people without rich parents to obtain 95% mortgages and get on the first rung of the housing ladder, is it illegitimate on the part of government to intervene to lower household energy bills. In one case it is the banks “refusing to lend”, in another it is the energy companies “ripping off the consumer”.
Yet simplistic presentation ignores the complexity of the public policy issues at stake in both cases. The banks are not lending, not just to homebuyers who cannot muster large deposits, but just as seriously to growing SMEs, in large part because of the more stringent capital adequacy requirements rightly imposed on them as a result of the banking crisis in order that taxpayers are not liable for bail-outs in future. In the case of energy, everyone who is serious about climate change (and Ed Miliband is) knows that carbon intensive forms of energy use will have to fall dramatically in the decades ahead – coal use is rising at present - and it is difficult to see how this can be achieved without the price mechanism playing a crucial role. Domestic household energy bills may not have to rise as much as the necessary price rise in carbon use across the whole economy if we can promote much higher energy efficiency, but across the whole economy carbon consumption needs to be cut, possibly by a Europe-wide carbon tax or reformed Emissions Trading Scheme. There remains a big circle to be squared here.

Secondly, Labour has still to strengthen public perceptions of economic competence. Labour’s new emphasis on the “cost of living crisis” took me back to Harold Wilson’s successful campaigns in 1974. Labour’s party political broadcasts had Shirley Williams emptying her shopping basket to explain how much the price of each item had gone up under the Tories. It was then a successful electoral tactic, but it had disastrous economic and political consequences. In February 1974, when Labour unexpectedly won power, the new government sought to address the ‘cost of living’ crisis by raising key social benefits like pensions, freezing rents, holding down nationalised industry charges (like gas and electricity), subsidising key purchases like bread and cutting VAT. It also sought to maintain price controls in the private sector while relying on trade union goodwill through the ‘social contract’ to moderate wage rises. The result was the worst post war crisis in the public finances Britain experienced prior to the present one and a collapse of private sector profits that drove many companies near to bankruptcy. Labour won the second general election in October 1974 – just - having made the country’s economic problems worse, with terrible consequences in the medium term for Labour’s own credibility and unity. Not only has Labour’s energy freeze pledge in 2015 to be credible, it cannot be allowed to become a harbinger of a general policy of ill thought out market interventions.

It is of course good politics to choose an unpopular enemy to attack and the energy companies have few friends. However, it does not always make for good government. In the ‘social market’ economy which the majority of the Labour party now aspires to build in Britain, it is important for the party leadership not to turn ‘business’ into an enemy. Of course at the grassroots of the party and in the trade unions, there are a minority who yearn for a return to class politics, but it would be a fatal error.

Not only is it the case that business investment holds the key to growth in this country – and in a globalised economy, there is little a Labour government can do to prevent global companies deciding to make investments in other parts of Europe or the world if they judge them to be more attractive. Also, one of the main political achievements at the end of the last Labour government was to shift the consensus in Britain away from an ideological commitment to not interfering with the market and in favour of pragmatic industrial intervention.

The CBI and the Coalition now back this shift to industrial activism. It would be tragic if the unintended consequence of correcting market abuse in energy was to turn British business against Labour’s whole approach to industrial policy. Similarly, business cooperation is needed if we are to address labour market abuses such as ‘zero hour’ contracts and build new sectoral partnerships to raise skills and extend the ‘living wage’.
Fighting against all ‘special interests’ that hold Britain back

Of course it is right for Labour to promise to intervene where ‘special interests’ stand in the way of the public interest. But our political opponents and the general public will rightly ask of Labour whether in face of some vocal trade union opposition we will continue to take a robust line on public sector pay (which is central to the whole question of perceived economic competence), whether in the light of wider public spending pressures, we take seriously the case for continuing ‘public service reform’ in areas such as health and education and indeed, whether at next year’s special party conference, Labour is prepared to  radically reform the Labour- trade union relationship in a way fit for the twenty first century.

The political ability to mount a robust defence of the ‘public interest’ against the ‘special interests that hold Britain back’ is essential if Labour is to fight the next election from the political centre ground.  

Roger Liddle is chair of Policy Network and a Labour member of the UK House of Lords

This is a contribution to Policy Network's work on Understanding Populism .

Tags: Roger Liddle , Populism , Observatory , Progressive , Centre-left , Centre-right , Left , Right , Conservatives , Euroscepticism , Europe , EU ,

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The Policy Network Observatory promotes critical debate and reflection on progressive politics. It is centre-left orientated but determinedly challenges social democracy. It is pro-European but restlessly questions EU institutions and practices.

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