Penurious progressives

There will no doubt be much soul-searching at this week’s Labour party conference. There will no doubt continue to be subtle – and not so subtle – attempts to distance the party from the legacy of the Brown government and its cataclysmic electoral implosion. Without, of course, suggesting that it is therefore inappropriate for some of Brown’s closest associates to be leading the party to a bright new dawn, whether red, blue or purple.

The biggest issue on the agenda is the party’s stance on the economy. How can it regain credibility for its stewardship of the economy, given the perception among much of the electorate – successfully promulgated by the Coalition – that the poor state of the public finances in 2010 was almost entirely attributable to Labour’s uncontrolled largesse with other people’s money? Personally, I don’t buy the narrative that it was all Labour’s fault. But it doesn’t matter whether it is accurate or not. It is the one that the party will have to neutralise if it wants another sniff of power any time soon.

Yet, there is a different way of thinking about the problem. And it perhaps highlights the scale of the challenge the party faces.

Hopi Sen in his excellent recent piece in Renewal magazine on the Brown legacy frames it well (available here and via here). Simply put, what is the progressive case when there is no money? Why should voters return to Labour?

Progressive governments have typically delivered on their agenda by spending. Yet, even if one doesn’t fully embrace the Coalition’s narrative of austerity as a bulwark against bond market carnage, in the current context there are significant practical constraints upon additional spending. There are equally clear constraints on government’s ability to increase aggregate taxation. Talk of differential corporate tax rates for financial institutions – because they’re the baddies – is just so much hot air.

I suspect that in practice there is more room to manoeuvre on tax and spend than is typically suggested. But for Labour there are, in addition, significant political constraints upon promises of increasing spending. Even if it is technically possible, it is politically undesirable. Reclaiming economic credibility is perceived to require demonstrating fiscal discipline – recall Blair Mk1 holding to the Tories’ spending plans in the late 1990s. Hence, Ed Miliband’s protestations on Andrew Marr this morning that the new proposals for tuition fees have been ‘fully costed’.

So the challenge for Labour is why should anyone vote for the party if it cannot or will not increase public spending? The answer has to lie in a reconsideration of the meaning of progressive policy. It means a rigorous analysis of where state spending can make the most difference, and a willingness to conclude that the state can no longer afford to spend in other areas. That raises the prospect of challenging entrenched interests and state-dependency in order to free up money to be used elsewhere. Hence, the challenge is all the greater.

It strikes me that what Labour could be doing is looking rather more closely at social liberal arguments. For social liberals a commitment to combating inequality and disadvantage is coupled with a more critical stance towards the capacities of the central state, a scepticism about the benefits of unrestrained revenue spending, and a concern for the disincentive effects of state-dependency.

Social liberals see a positive and constructive role for the state. That is what differentiates them from more blue-tinged forms of liberalism. Social liberals also see restraint on the part of the state as a virtue. For Labour, in the current climate, it is a necessity. There could be a productive bit of business to be done. But for business to be transacted there is the little problem of tribalism to be overcome.

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