The Labour Party under Ed Miliband

Trying but failing to renew social democracy

Eunice Goes

• Publisher: Manchester University Press
• Year: 2016
• Print ISBN: 9781784994235
• eBook ISBN: 9781784998059
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: International Relations
• Index: Politics & International Relations

Was Miliband successful at turning the page on New Labour and at re-imagining social democracy for the post-global financial crisis era? This study maps the ideas - old and new - that were debated and adopted by the Labour Party under Miliband and shows how they were transformed into policy proposals and adapted to contemporary circumstances. It seeks to demonstrate that the Labour Party under Miliband tried but failed to renew social democracy. This failure is one of the several reasons why 'Milibandism' was so overwhelmingly rejected by voters at the 2015 general election. Goes offers a thought-provoking perspective on how political parties develop their thinking and political blueprints that will appeal to scholars and students of British politics and ideologies and to anyone interested in contemporary debates about social democracy.

1

Social democracy at a time of crisis

I think this is a centre-left moment … But for me it’s a centre-left moment because people think there’s something unfair and unjust about our society. You’ve got to bring the vested interests to heel; you’ve got to change the way the economy works. That’s our opportunity.

Ed Miliband¹

Eight years have passed since the beginning of the global financial crisis but its impact still reverberates across Europe. Levels of public debt are still high, the stability of European banks is questioned by rating agencies, economic growth is anaemic, and millions of people are still feeling the impact of unemployment and falling living standards. In fact, at the time of writing the spectre of permanent economic stagnation haunts Europe.

The global financial crisis that metamorphosed into a debt crisis and deep economic recession has also had a profound political impact. For those few social democratic parties that were in power when the crisis hit Europe, the impact was devastating. As they were forced to implement draconian public spending cuts in response to ballooning public deficits, voters blamed them for the economic recession that followed those austerity measures and condemned them to the opposition. In the process, these parties lost their credibility as efficient and safe managers of the economy.

But European social democracy is not merely suffering from a crisis of credibility. It is also suffering from an identity and ideological crisis. What had been social democracy’s economic paradigm for over a decade was reduced to smithereens with the collapse of Lehman Brothers on Wall Street. As the old certainties floundered on Wall Street and in the City of London, and the State was left to pick up the pieces, European social democrats had no coherent response to those dramatic events. Some talked about a new ‘social democratic moment’, but few offered concrete ideas about how to create it, and most succumbed to austerity policies.

Their state of intellectual and ideological confusion was somewhat understandable. On the one hand the magnitude of what was happening was too big to be fully comprehensible. On the other, the right, supported by the institutions of the EU, transformed what was a crisis of capitalism into a crisis of the State, which could only be cured by drastic public spending cuts and structural reforms. Thus, as Mark Blyth aptly put it, ‘austerity became and remains the default policy response to the financial crisis in the Eurozone for both material and ideological reasons’:² material because there have been few other easily available policy options, and ideological because the programme of reducing the size of the State matched the programmatic aims of the centre-right governments that governed most countries of the Eurozone at the time.

The crisis in European social democracy had a direct impact on the Labour Party. First, because Labour in Britain faced very similar challenges, and second, because there were few examples from which Ed Miliband could draw inspiration to develop his own response to the deficit crisis and deep economic recession that affected Britain. In other words, there were no social democratic parties in government or in opposition with plausible ideas and policy responses that offered an alternative to austerity.

In the countries of the Eurozone, the social democratic left was too absorbed by the intricacies of the requirements of the monetary union even to consider big-picture questions about models of capitalism. The absence of real alternatives is important because the first condition to effect transformative change is to have new, plausible, and coherent ideas that can offer some guidance on how to respond to specific political puzzles. If those ideas are missing, then there is little chance that a programme of political change can be developed.³

As Miliband’s difficulties in developing a successful programme of political change cannot be properly understood without reference to current debates about the future of European social democracy, this chapter examines the ideational crisis of European social democracy in the post-global economic crisis period. To do so, it focuses on the institutional (in particular, the policy requirements of the Single Market and of the monetary union) and ideational constraints (the prevailing neoliberalism/ordoliberal⁴ approach informing EU policy) that European social democratic parties faced whilst trying to find an ideologically coherent response to the sovereign debt crisis. Next, the chapter explains the impact of the Eurozone crisis on European social democratic parties. It also analyses how the radical left and the populist or extreme right are benefiting from the intellectual and ideological turmoil of European social democracy. The final section of the chapter assesses the failed attempts to develop a social democratic alternative to austerity politics.

Social democracy and European integration

The confused and incoherent response of European social democratic parties to the global financial and economic crisis and the Eurozone sovereign debt crisis is partly the result of the ambiguous relationship European social democracy has developed with the project of European integration. It is important to note that this ambiguous relationship is not uniform across the different social democratic parties. Instead, European social democrats developed a variety of reactions and approaches to the project of European integration. For instance, the German Sozialdemokratische Partei Deutschlands (SPD) maintained until the 1990s a sceptical attitude to European integration, mistrusting the ‘market-making’ nature of its project whilst at the domestic level it did not challenge the ordoliberal assumptions that had shaped Germany’s postwar economic policy. A similar sceptical attitude could be found in the British Labour Party and in the French Parti socialiste (PS). Likewise, in Scandinavian countries, social democrats feared that the deepening of European integration could undermine their generous welfare states. But for the socialist parties of Southern Europe the European project inspired an altogether different response. For these parties the project was a guarantor of both democracy and economic prosperity. But with time, as argued by Dionyssis Dimitrakopoulos, most, if not all, European social democratic parties ‘came to lend their – often critical – support to it’.⁵

From the late 1980s the diversity of positions on the European project became blurred and less relevant as the EU demanded greater uniformity from its member states in important policy areas such as macroeconomics, trade, and environmental policies, as well as in all the policy areas covered by the Single Market. With time, the internal dynamics of the European Single Market and of the monetary union became the accepted mould from which national policies had to be adopted and adapted.

The Single Market’s four freedoms – workers, goods, services, and capital – were predicated on programmes of privatisation of public services and on economic and financial liberalisation, as well as on the erosion of labour and social rights that the freedom of movement of workers across the EU de facto provoked. As Gerassimos Moschonas showed, ‘the politicisation of integration through a dense, rigid, institutional apparatus has consolidated and solidified the liberalisation of Europe’.⁶ It turns out that in the medium-to-long term this development was detrimental to social democratic aims and means.

The first socialist or social democrat government to fall victim to this dynamic was François Mitterrand’s PS in 1983. After two years of radical policies – which included nationalisations, the rise of the minimum wage, an interventionist industrial policy, the reduction of the working week to thirty-nine hours, and the strengthening of labour rights – Mitterrand was forced to implement drastic public spending cuts in order to fight inflation but also to remain within the then European Monetary System, the precursor of the monetary union.⁷ Mitterrand’s U-turn, called ‘le tournant de la rigueur’ (the shift to austerity), was conceived with two goals in mind. First, it aimed to pursue a franc fort policy; second, it aimed to neutralise the re-emergence of Germany as a dominant power in Europe. Interestingly, this U-turn was perceived in French socialist circles as ‘Mitterrand’s choice for Europe rather than socialism’ and was defined as the PS’s ‘Bad Godesberg moment’.⁸ However, Mitterrand’s choice came with a price tag. A strong-franc approach led to the dramatic rise of unemployment, which has persisted for over three decades.

This path was then set in stone for all EU member states with the signing of the Treaty of Maastricht in 1992. As Perry Anderson said, after Maastricht, the ‘historical commitments of both Social and Christian Democracy to full employment or social services of the traditional welfare state, already scaled down or cut back, would cease to have any further institutional purchase’.⁹ The convergence criteria set in the Maastricht Treaty (public debt no higher than 60 per cent and public deficit no higher than 3 per cent of GDP, inflation within 1.5 per cent) not only drastically reduced the ability of member states to decide macroeconomic policy, but also reflected a small-state, or, in the words of Perry Anderson, a ‘less state’, vision of Europe.¹⁰ This neoliberal/ordoliberal logic was later on reinforced by the Stability and Growth Pact imposed by Germany as a way of ensuring that members of the monetary union complied with the convergence criteria and maintained fiscal discipline. In the process, European social democrats became active contributors to the construction of an ‘ordoliberal’ Europe.¹¹

The macroeconomic approach underpinning the Single Market and the monetary union was consistent with the monetarist/ordoliberal approach promoted by centre-right governments in Europe; however, it was problematic for social democrats. As Moschonas argued, ‘granting autonomy to central banks and to the European Central Bank – conservative, “inflation averse” institutions – at the national and European levels respectively constitutes an institutional constraint which significantly limits social-democratic freedom of manoeuvre’.¹² Indeed, for the members of the Eurozone it is next to impossible to invest in ambitious programmes of infrastructure building or to deepen the levels of social protection without violating the governing rules of the monetary union.

European social democrats tried to neutralise the monetarist effects of the Maastricht Treaty by making calls for a ‘social Europe’. For example, the then president of the European Commission, Jacques Delors (himself a socialist) convinced some reluctant social democrats that ‘more Europe’ was the only way to secure the European social model. To a certain extent, the Social Chapter of the Maastricht Treaty tried to harmonise labour rights and social protection; however, the harmonisation of certain aspects of the welfare state was never on the cards.¹³ Those countries that had weak welfare states did not have incentives to develop them further. More importantly, these developments signalled the impossibility of pursuing social democratic policies at the national level but also at the EU level. As social democratic governments have a limited scope to deliver social democratic policies to their voters, the national level then becomes irrelevant.¹⁴ However, and as Moschonas claimed, ‘the European level is neither sufficiently structured and unified, nor sufficiently flexible, to facilitate the implementation of a European social democratic strategy’.¹⁵ In other words, European social democrats found themselves in an ideological cul-de-sac. Their embrace of the European project left them unable to deliver the type of vision and policies that were inscribed in their ideological and historical DNA.

For one reason or another, socialists and social democrats across Europe accepted this logic. Interestingly enough, it was only the Scandinavian countries who rejected the membership of the single currency on social democratic grounds. Indeed, they did not want to erode their welfare states. By contrast, in Southern Europe, membership of the single currency was presented as the ‘only game in town’, with centre-right and centre-left parties pursuing it as a ‘patriotic cause’. Moreover, socialists in Portugal, Spain, and Greece believed that the Single Market and later the monetary union would enable them to launch the market-corrective policies that they could no longer implement nationally. In Germany and in the Netherlands, the social democratic left, which had been in opposition for most of the 1980s, came to accept the idea that the return to power required the acceptance of the agenda of their opponents. By the early 1990s, the British Labour Party endorsed the values of the Single Market and of the European Social Chapter, and advocated Britain’s membership of the European Exchange Rate Mechanism (which set th...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• Acknowledgements
• List of abbreviations
• Introduction
• 1 Social democracy at a time of crisis
• 2 The road to somewhere
• 3 Labour and the economy
• 4 Labour and equality I
• 5 Labour and equality II
• 6 Labour and the politics of belonging
• Conclusion
• Bibliography
• Index