NO NEED FOR DIVORCE

Tribune leader, 18 December 1992

The draft report of Labour's working group on relations between the party and the trade unions has had an un­justifiably bad press, largely because whoever first leaked it meant it to have a bad press.

The party is buzzing with accusations, counter-accusations and rumours about the report - despite Tribune's attempt last week to clear the air by publishing its most important sections verbatim. There is a real danger that, unless some­thing is done quickly, there will be a spectacular bout of internal feuding.

The immediate task is to bring forward publication of the report. Then the party must allow a reasonable period for real consultation, so that everyone has a chance to air his or her views. To rush through large-scale constitutional change is to invite disaster.

It is crucial for everyone to recognise that an immediate divorce of party and unions, even if it were desirable (which it is not), is simply not feasible. Labour can­not survive in the short to medium term without union funding.

It is inevitable that the unions will ex­ert an influence over Labour regardless of the formal relationship or lack of one. The question is how to ensure that the unions’ power is constrained. The answer is not to destroy the formal relationship but to democratise it.

Many of the suggestions in the draft working party report are eminently sen­sible if this is the aim, in particular the idea that trade unionists who pay the po­litical levy should be allowed to participate in party elections and selections as "registered supporters".

Other ideas are less attractive, particu­larly the retention of the block vote at party conference (albeit reduced to 50 per cent). There are also problems with the retention of electoral college systems for leadership elections and candidate se­lections: it would be more democratic to give registered supporters one-third of a vote each and add these to full members' votes in a single ballot.

Nevertheless, the working party is thinking along the right lines: there is no need for the discussion of its proposals to be other than friendly. Meanwhile, every­one involved should recognise that the party-union relationship is not the most urgent question facing Labour. Put sim­ply, it would do no harm for some of the energy now being put into internal Labour Party matters to be diverted into coming up with an election-winning eco­nomic policy.

GET RID OF THIS AFFRONT TO DEMOCRACY

Tribune leader, 11 December 1992

Wednesday’s announcement that the Prince and Princess of Wales are to separate could have come as little surprise to anyone who has seen even the smallest snatch recently of the low-grade soap opera that is the British royal family. It had been obvious for years that the marriage was on the rocks.

Equally unsurprising were the syco­phantic expressions of concern for the royal ex-couple to be heard from all in the House of Commons but a handful of left-wing Labour MPs after John Major had made the announcement. However repel­lent they find the candyfloss and waste of the House of Windsor, politicians of all parties feel the need to pander to what they perceive as widespread royal ism among the voters. Rather than say what they think about the monarchy, they keep quiet.

They would be better off speaking out. The monarchy's excesses in the past few years have combined with a general de­cline of deference to weaken popular sup­port for the institution.

The passenger on the Clapham omnibus knows that the breakdown of a long-term relationship is an unhappy experience for anyone. He or she also knows that it is far more easily bearable for someone with several homes and a massive income for life, paid out of public funds, for an unde­manding job with unlimited holidays.

There is a growing popular sense that the British monarchy's time is up – that if we are to have a monarchy at all it should be on the Scandinavian model, with the monarch an ordinary citizen and the relatives of the monarch required to earn a living like the rest of the popula­tion.

For Tribune, that does not go far enough. The underlying problem with the monarchy is not that it has become a farce, although it has, but the hereditary principle on which the whole institution rests. In a democracy, a person should not have political power simply on ac­count of who his or her parents were. Yet, as all the solemn discussion of the consti­tutional implications of the royal separa­tion made clear, that is, in the end, what the monarchy is all about.

By all means tax the parasites and make them travel around London by bicycle, but the solution is a republic with an elected head of state.

DEFENCE WORKERS ON THE DOLE

Tribune leader, 4 December 1992

This Wednesday, 300 trade unionists from Royal Ordnance, the arms com­pany privatised in 1987 and now run by British Aerospace, lobbied Parliament in a last-ditch attempt to stave off factory closures that will put up to 2,500 workers on the dole.

It is unlikely that their campaign will succeed. Royal Ordnance workers are just the latest in a long list of arms indus­try supplicants, for, in the wake of the ending of the cold war, the market for Britain's arms industries has collapsed. Aerospace, shipbuilding, fighting vehicles and fefence electronics have all been hit. Trade unions estimate that, since the Berlin Wall came down, some 120,000 workers in the defence industries have lost their jobs, half of them in aerospace alone. Another 120,000 or so in related in­dustries have lost their jobs as a result. Many thousands more redundancies are in the pipeline.

Unlike miners, defence industry work­ers do not readily command public sympathy for their plight. The arms industry is generally considered a nasty business. On the left, anti-militarism has often proved more deep-rooted than concern for workers losing their livelihoods.

Yet the crisis in the defence industry is not something that can be shrugged off or ignored. The military sector has taken a disproportionate role in the British econ­omy since the industrial revolution; in re­cent years, it has been the single most im­portant British manufacturing sector. Be­tween 1980 and 1990, the share of indus­trial production taken by the defence in­dustries grew from 6 per cent to 11 per cent.

Most crucially, the defence sector has been an oasis of high technology in the desert of "low-tech, no-tech" Britain. The defence jobs that are being lost are highly skilled: in aerospace, three professionally qualified engineers have been made re­dundant for every blue-collar worker. There is a real danger that the collapse of the defence sector will shrink for ever the skills base of the British economy.

Labour's response to all this has been entirely inadequate. Instead of arguing forcefully that the defence industry crisis shows the desperate need for an interven­tionist industrial policy, Labour front­benchers have done little but refer apolo­getically to the party's proposal for a de­fence diversification agency to manage the transition from military to civilian production.

The reason for this sorry story is simple: no substantial detailed work has been done on the policy for nearly a year and the Labour front bench knows it. The unions are quite right to be telling the party that it is time to get its finger out.

EURO-REFLATION?

Tribune, 4 December 1992

As Gordon Brown and his advisers chew over their options after Norman Lamont's autumn statement, Paul Anderson and Ben Webb take a look at what left economists are saying

In the wake of last month's autumn statement, Labour is having to do some serious thinking about its economic poli­cy. The party's line on Norman Lament's "recovery package" remains that it is no such thing. "Too little, too long delayed and too inadequate to boost confidence for more than a weekend," said Gordon Brown, the Shadow Chancellor.

But even at Labour's highest level there are worries that Lamont stole some of Labour's best ideas for his autumn state­ment: tax breaks for industrial investment, an end to car tax, lease-buying of trains, re­laxation of constraints on the use of re­ceipts for council house sales, easing of Treasury rules on capital spending, direct intervention in the housing market.

There is a consensus among Labour poli­cy-makers that, although the party can in the short-term make much of the small scale of Lamont's measures and attack the spending cuts that were the other side of his autumn statement, in the medium-term Labour needs to come up with some new ideas. This view is reinforced by a widespread belief that the economic poli­cies on which Labour fought the last elec­tion failed to convince voters that Labour would make very much difference to Britain's dire economic plight.

Brown is now taking soundings on the options from economists and advisers with a view to presenting a major new policy package early next year. What he will come up with is not yet clear, but there are indications of his direction in the policy document he launched immediately before the  autumn statement,  Labour’s Campaign for Recovery.

On one hand, the document calls for a "British New Deal for the nineties" with an emergency employ­ment programme at its core. This is, for the most part, familiar stuff except that it would be paid for not by income tax in­creases but by keeping stamp duty on share transactions and by slapping a one-off tax on the profits of privatised utilities.

Brown justified the abandonment of in­come tax increases by arguing that they would depress consumer demand at a time of deep recession, but he is clearly also looking for ways to raise money for public spending which do not leave Labour as vul­nerable to Tory attack as it was last April.

More significantly in macro-economic terms, the document also backs co-ordinat­ed international action to stimulate the economy (dubbed "new Keynesian") by the Group of Seven leading industrial countries and the European Community, According to aides, Brown is now taking very serious­ly the European recovery package proposed last week by Jacques Delors, the EC Presi­dent.

It is another matter whether Brown swallows the argument that reflation in one country will not work, as advanced by several influential Labour economists, in­cluding Meghnad Desai and Stuart Hol­land.

According to Desai, a Tribune columnist and a key Labour economic adviser in re­cent years, "capitalism has reconstituted it­self through its crisis in the seventies as a global system in which nation states are no longer able to exercise autonomous control over capital". The EC, however, as a rela­tively closed economy, might be able to in­stitute Keynesianism as applied by individ­ual nation states in the fifties and sixties.

Holland, the author of the most coherent outline of Labour's Alternative Economic Strategy of the seventies and early eight­ies, The Socialist Challenge, has long since abandoned the AES's package of "Keynesianism in one country" plus import con­trols and more public ownership. Most re­cently, the former MP for Vauxhall has been examining the possibilities of an am­bitious European reflation programme, far bigger than that suggested by Delors, which would see the EC gain borrowing and lending facilities and give a "social di­mension" to economic policy. His number-crunching is the basis for the European Re­covery Programme launched at Labour's Europe conference last month by Ken Coates, the Labour MEP for Nottingham.

According to the Coates manifesto, joint action for European recovery "should be led by the European Commission and co-ordi­nated with member Governments. Not only will this be easier than the arrangement of convergent national initiatives outside the framework of the EC, it will provide a nec­essary catalyst to cross-border flows which can be calculated to maximise development possibilities and the multiplier effect which these can exert."

The idea of a co-ordinated European re­flation, let alone an EC-based recovery pro­gramme, has plenty of critics. Most obvi­ously, there are many, particularly among Labour's Eurosceptics, who question the very premise that reflation in one country is no longer possible.

Bryan Gould, the MP for Dagenham and an unashamed advo­cate of "Keynesianism in one country” and interventionist industrial policies, says: “What the economy desperately needs is reflation. We are suffering  a ter­rible hangover from Thatcherite policies, and we ought not to be afraid to adopt Keynesian   policies,   which have a very respectable pedigree. We have to get back to the notion that monetary policy is not a given. For Labour to opt out of the debate on mone­tary policy is really quite remarkable. We are in danger of capitulating to the views of those who have always created recession and depression."

Further to the left, Seumas Milne, a Tri­bune columnist and one of the authors of Beyond the Casino Economy, a recent re­statement of the most left-wing version of the AES, argues that advocates of Euro-re­flation have massively underestimated the continuing role of the nation-state in macro-economic management.

According to Milne, a staunch opponent, like Gould, of the Maastricht treaty, Britain needs a lot more than old-fashioned Keynesian refla­tion: "The events of the last few months have forced back on to the agenda policies, such as exchange controls and public own­ership, that were previously suppressed in the name of realism".

But not all the critics of the European road to reflation are old-fashioned Eurosceptics or nationalisers: some even have Brown's ear. Dan Corry, a senior economist with the Institute for Public Policy Re­search who was one of the architects of Labour's economic policy in the run-up to the last election, says: "I don't think Europe will rescue us. If we could have co-ordinat­ed European expansion, I’d say: 'Fantastic!' But I'm not convinced. It would be simple if we all had the same problems but it's not very helpful to tell people to leave it all to Europe."

At the same time, however, Corry is scep­tical of home-grown cures. "Brown is being criticised for not being Keynesian enough," he says. "But he has to consider the compli­cations: a ballooning public sector borrow­ing requirement as well as balance-of-payments problems and a huge debt overhang. That said, he could be more relaxed, and use the space to explain the case for public investment. Then, the old anti-taxation rhetoric might not have such resonance."

According to Corry, the difficulty is as much political as strictly economic. "Ex­plaining multiplier effects to political jour­nalists is not easy, as I discovered in the last election. The alternative to making a case for investment was to go out of our way to sound decent and sensible, which is what we did. Today, it really comes down to whether Labour would put something like £10,000 million into the economy. If Labour proposes to do that, it will have to explain itself."

Corry's point of view is echoed by An­drew Gamble, a former AES supporter who has written several books on the British economy and was one of Marxism Today's main writers in the eighties. He is doubtful about the political possibility of a Europe-wide recovery programme and sees any plan for independent reflation as “extremely risky”.

"The British economy is much more vul­nerable than in the sixties or seventies," he says. "It was difficult enough then to pur­sue independent policies. The changes put in place through the eighties, particularly the removal of exchange controls, make it hard to conceive today. It is difficult to imagine a Labour government standing up to the pressures exerted through the finan­cial markets. A co-ordinated European re­flation is probably the most attractive route and should still be a priority for Labour, but the tactical problems in securing co-op­eration across Europe would be immense.

"There is also the domestic route. First, find a way of keeping the financial markets happy and devise a policy that puts all the emphasis on infrastructure and education and training, This would be a targeted poli­cy, fiscally prudent and crafted to direct money to particular areas of the economy that would yield disproportionate gains."

There would, however, be political costs in such an approach: spending would have to be held down, and so probably would pay claims. It is a project that Michael Heseltine would probably feel more comfortable with than Labour. Gamble believes that Labour could get away with it only if it sold the programme as part of a long-term strat­egy for transforming British society.

Andrew Glyn, an economist at Oxford University who was one of the main left critics of the AES in the early eighties, is also sceptical about the options available to Labour. Although "the worm is beginning to turn" in economic thinking and "the pro-marketeers are on the defensive", it is diffi­cult to work out what the left ought to be saying, he argues. While "it is very hard to dispute the view" that reflation in one country has become highly problematic, there are other ways of restoring high levels of employment.

"The alternative, which is hardly ex­plored, is to expand public services, in other words to redistribute income to the social wage. It is possible to have much higher levels of public spending. There's not some economic logic that puts a natural limit on public expenditure.

"This is precisely what was done in Swe­den in the eighties. But that case is instruc­tive, because it shows that you need popu­lar support to do it, and you can go too far. It reached a limit in Sweden, but at a huge­ly higher level of welfare than here. So if people object, and you lose political sup­port, you're up a gum tree."

Unsurprisingly, there is no consensus among left economists about the direction in which Brown should be moving: just about the only thing they can agree about is that, whatever Labour opts for, it will not provide a miracle cure for Britain's econom­ic malaise and it will be difficult to imple­ment. More than ever before, breaking with economic orthodoxy is more easily proposed than executed.