KEYNESIANISM IN ONE COUNTRY IS NOT ON

Tribune leader, 30 April 1993

The government has been wrong so of­ten before about the imminence of Britain's recovery from recession that it has been simple for Labour to be scepti­cal about this week's gross domestic product statistics for the first quarter of 1993, particularly as most credible inde­pendent analysts agree that the recovery is, at best, tentative.

Unemployment has yet to reach its peak and consumer confidence remains low. The manufacturing base has been ravaged by years of Tory neglect and the rest of western Europe, Britain's main ex­port market, is in recession. A revival of consumer demand is likely to worsen the balance of payments deficit.

Meanwhile, largely because of the re­cession, Britain is running a giant budget deficit and, as the effects of last year's de­valuation work their way through the economy, inflation is creeping up. The government cannot let the budget deficit and inflation get out of hand but knows that an application of austerity measures to reduce them would kill any hope of sustained recovery.

All this gives Labour plenty of ammunition with which to attack the govern­ment. Gordon Brown, Robin Cook, Harri­et Harman and the other Labour front­benchers with economic portfolios have set about the task with gusto. What they have not yet done, however, is explain ad­equately what they would do differently. Of course, there have been some steps in the right direction. Mr Brown has laid down a useful framework for policy in his speeches and his articles about the cen­tral importance of a highly skilled labour force for any country wanting to compete in the (now global) capitalist economy. And Mr Cook's industry policy document, published earlier this month, contains an analysis of Britain's decline that deserves for more attention than it has received.

Nevertheless, much remains to be done. For all the "supply-side" strengths of Labour's recent thinking, the party often seems not very different from the Tories when it comes to macro-economic poli­cies. On interest rates, exchange rates and public spending, Labour appears more or less to accept the same parame­ters as the government.

Hits is very much what Bryan Gould, Peter Hain and various members of the hard-left anti-Maastricht lobby have been saying - and it would be comforting for the left to believe that these critics of the leadership line have a plausible alter­native programme that could easily be adopted by Labour. Unfortunately, they have not.

Their position consists, essentially, of a return to the one-nation Keynesianism of Labour's "alternative economic strategy" of the seventies (seasoned with more or less nationalisation, according to taste). That failed last time that it was tried by a medium-sized European country (France in the early eighties) and there is no rea­son to believe that it would work in Britain in the late nineties.

Indeed, the flight of capital and balance of payments crisis that scuppered Fran­cois Mitterrand's expansionist experi­ment would be as nothing compared with what a future British Labour government could face were it committed to a compa­rable programme. In the end, the one-na­tion Keynesians offer only nostalgia for a world we have lost, when plucky little Britain could stand alone.

To his credit, Mr Brown has recognised this: his acceptance of the constraints within which British macro-economic policy has to operate is not capitulation but realism.

The problem is that, apart from a few hints about the need for international co-­operation to secure sustainable growth, he has given little indication of how the limits on a medium-sized nation state's ability to manage demand might be tran­scended. His priority now should be to ar­ticulate clearly the potential for the European Community as the means for implementing a counter-cyclical macro-economics.

A LAMENTABLE PERFORMANCE ON BOSNIA

Tribune leader, 23 April 1993

Labour's official response to the past week's public outcry over Bosnia has not been enough. Belatedly realising that the public mood has changed, the party has thrown the smallest of scraps to those coiling for military intervention to protect the beleaguered Balkan republic from Serbian (and, increasingly, Croat) aggression.

Jack Cunningham, the shadow Foreign Secretary, told the House of Commons on Monday that the United Nations Security Council should issue an ultimatum to the Serbs, who should guarantee safe passage to refugees, agree to a permanent ceasefire and sign the Cyrus Vance-David Owen plan for the cantonisation of Bosnia. If they do not, in Mr Cunningham's words, "the Security Council should consider authorising a punitive air strike against the Serbs' supply lines in Bosnia".

That was the scrap. But, in the same speech, Mr Cunningham also explicitly ruled out Labour support for lifting the embargo on supplying arms to Bosnia and said that he could not see "any sensible or legitimate argument" for intervention by ground forces. As Mr Cunningham should know, this is a cop-out.

On one hand, the Vance-Owen plan, far from being a means of ending the war in Bosnia, is actually encouraging the Serbs and Croats to grab what land they can: it should be abandoned at once.

On the other, it is clear that, alone, air strikes on Serbian supply lines will do little to halt the relentless advance on Bosnia, let alone reverse it. The lifting of the arms embargo and military intervention by ground forces in defence of Bosnia are both essential if the country is to survive.

Of course, there are risks in both courses of action but these have been deliberately exaggerated by their opponents. Those who talk of the danger that arming Bosnia will simply give Russia the excuse to step up its support for the Serbs conveniently forget that the west has plenty of ways to stop Russia from doing any such thing, not least the cessation of aid.

Similarly, the argument that intervention by ground forces would need too many troops is a weak one. The number of ground troops that 'most military experts agree would be required for the effective defence of Bosnia is 50,000 or so. That sounds a vast number until one remembers that the United States alone contributed 400,000 fighting troops to the international coalition assembled in 1990-91 to expel Saddam Hussein from Kuwait.

In other words, the problems that the west has with sending in ground troops and lifting the arms embargo are not essentially logistical but political: western governments, led by the British and French, simply do not have the will to defend Bosnia, a sovereign state recognised by the United Nations.

By accepting nine-tenths of the arguments used to excuse hand-wringing inaction, Mr Cunningham has let down his party as well as the people of Bosnia.

ITALIAN VOTE MEANS NOTHING FOR BRITAIN

Tribune leader, 23 April 1993

The result of the Italian referendum on electoral reform, which took place on Sunday and Monday, is already being hailed by Labour opponents of any change to Britain's first-past-the-post electoral system as proof that they are right. It is nothing of the sort.

To begin on a technicality, Italy voted by a massive majority not for the British firstpast-the-post system for all elections but to repeal the system of proportional representation used in elections for the Senate (upper house of parliament). The precise system that replaces it has yet to be determined. It could well end up as something far closer to the alternative vote, a version of which won the support of a majority on Labour's Plant Commission at the end of last month, than to FPTP.

Of course, the likelihood is that the referendum will be seen by the political parties as justifying a move to a majoritarian system not just for the Senate but for the Chamber of Deputies (lower house of parliament). But this is where the real problems start for those myopic dinosaurs on the British Left currently crowing about how sensible the Italians have been.

The reality is that, in the current Italian political climate, a single-member-constituency majoritarian system, whether based on AV or FPTP, is a recipe for plunging Italy into an even deeper crisis than it is already in.

It is clear from the opinion polls that, under a majoritarian system, the Northern Leagues would sweep the north of Italy, the former-communist Party of the Democratic Left (PDS) would take the central region and the Christian Democrats (DC) would completely dominate the south. The regional polarisation that FPTP has given Britain, whereby the Tories sweep southern England and Labour representation is heavily concentrated in the north, Scotland and Wales, is as nothing compared with the prospects for Italy under a majoritarian system.

None of the three political parties that would gain significant representation would have a majority in parliament - and none would be able to form a coalition with another, so great are their political differences. Far from "guaranteeing strong government", the new system would be likely to create a crisis of =governability, with destruction of Italy as a national polity a real danger.

Such considerations were not in many Italians' minds when they voted earlier this week. The overwhelming yes was in essence a protest against an utterly discredited political class.

Yet a new electoral system would do nothing about the cause of the distrust of the political class, the endemic corruption of the Socialist Party (PSI) and the DC. Although it would destroy the PSI's chances of winning representation in parliament again, it would actually strengthen the position of the DC. Italy needs not a change of electoral system but new elections to remove the gangsters from office.

The only lesson for Britain from the referendum result is that, when a political class loses all legitimacy, the people will use all means available to kick back. All the criticisms of Britain's electoral system made by advocates of proportional representation remain as valid as ever.

MAKING IT: INTERVIEW WITH ROBIN COOK

Tribune, 23 April 1993

Britain needs a strategy to get it back to making things again, Labour's spokesman on trade and industry tells Paul Anderson

The Sunday Times was less than impressed by Labour's new industrial policy document, Making Britain's Future, launched by Robin Cook earlier this month.

“The document marks a nasty U-turn away from the new realism of the pre-election industrial policy developed by Gordon Brown, the Shadow Chancel­lor,” boomed an editorial in its business section. “Labour's corporatist, interventionist instincts are alive and putting the boot into the free market. Those who thought Labour had forsaken the 'prof­its are dirty, bash big business' mentality of the post-war decades are in for a rude awakening.”

Cook is dismissive of such criticisms. “The right-wing press has always tried to have it both ways,” he says. “On one hand, it accuses us of returning to the past; on the other, it says that we're dumping everything that we once believed in. These are two inconsistent statements.”

He has no time for the idea that there is a crucial difference of emphasis between his own approach and Brown's: “His stress on education and training fits very well with the emphasis we put on the short-term character of British industrial thinking and the need for long-term investment.” Far from ditching Labour's late-eighties message, he says, the new document “builds on the policies of 1992”.

“If it has a more proactive tone, it is because the crisis in British industry has deepened since Meet the Challenge, Make the Change was drafted in 1989. What we have tried to do is inject a sense of urgency and crisis. The competition is no longer only Germany and Japan, it is also Taiwan and the other newly industrialised countries which, on present trends, will pass us at the beginning of the twenty-first century.

“We see a key, proactive role for government in developing an industrial strategy and co-ordinating the other players. This is not an attempt at some kind of western version of central planning. We're not suggesting that it's the job of civil servants to tell industrialists how to run their businesses. But it is the job of government to create the conditions in which those businesses can succeed.”

So is there a role for social ownership of indus­try? Cook believes that there is. “Government should be a major player in industrial strategy. That may mean, from time to time, that the gov­ernment should take a stake where doing so assists financial reconstruction or investment.

“Look at the case of Daf. When I visited Holland to discuss the Daf crisis, I met a Minister from the Dutch Labour Party (PvdA), who was anxious to express, first of all, that he was following a nation­al policy not simply a PvdA policy, and that, sec­ondly, because Holland had an industrial strategy, the Government could identify the circumstances in which it was appropriate to intervene. Daf is at the forefront of truck technology and is critical to a whole number of other suppliers – so the govern­ment took a holding of equity in Daf, not as a sub­sidy but as an investment. When the company re­turns to profitability, it will sell its stake.

That sensible, practical, far-seeing approach is light-years away from the approach of the British government. Nobody's talking nationalisation, but for the British government to be willing to take eq­uity holding as part of a co-ordinated financial re­construction and rescue plan might have been sen­sible.”

According to Cook, the most important innovation in Making Britain's Future is its analysis of the systemic problems that have held back British industry: the weakness of industry compared with the financial sector, the outmoded structure of the British joint-stock company, the over-centralisation of economic power, the instability of the business cycle (which discourages long-term investment) and “the cultural bias against industry”.

The document argues that Britain needs an industrial strategy “Builot on a national consensus that recognises the importance of manufacturing, and Cook is at pains to emphasise that Labour's critique is not purely party-political.

The Conser­vatives have made things so much worse in several major ways,” he says, “But we need to look beyond their ghastly errors at the underlying reasons that we've had an industrial decline going back a centu­ry. Getting the Conservatives out is not enough to reverse it – although it certainly is a start.”

In policy terms, says Cook, there are three areas where Labour is making a particular effort to re­think its position. “First of all, we're proposing a major change in the architecture of industrial and commercial life in Britain. There are some interest­ing parallels here with the analysis that Labour has developed over the past decade of the British political constitution and its programme for mod­ernising it and devolving political power from the centre. Companies' constitutions need the same modernisation, and economic power needs the same challenge to its centralisation and concentration.”

Secondly, he continues, Labour has some new ideas on investment. “Of course, we have always stressed the importance of investment, but we're now looking at new instruments of investment, try­ing to involve institutions in industrial investment that have previously not been involved,” he says, mentioning in particular the potential for getting pension funds and building societies to take long-term stakes in British industry.

“The third fresh point that we're proposing is a new partnership between government and indus­try, taking on explicitly the argument of the free marketeers that the best thing that the govern­ment can do is nothing. Not only is this wrong in theory, it is also pointless in practice because all of our competitors have governments which are back­ing and helping their industry.”

A particular target for intervention is the defence sector, currently reeling from post-cold-war cuts. The defence market is a market that's entirely cre­ated by government and it's now collapsing precise­ly because of government decisions,” says Cook. The government has decided to buy less, for rea­sons that nobody is challenging. If you have a mar­ket in which government has called into being a whole raft of producers and then decided that it is going to cut the scale of that market, it has a plain obligation to intervene again to help those compa­nies find alternative markets.

The defence industries have two things lacking in civilian industry: sophisticated plant and a skilled workforce. If there is one decision that this government has taken in the past year that bor­ders on criminal negligence it is the way in which it has simply taken a hatchet to the defence research establishments with no attempt to plan the trans­fer of their skilled workforce with a background in research and development into industry.”

As well as being Labour's industry spokesman, Cook is the most senior Labour figure to have pushed consistently hard for the introduction of a system of proportional representation for the House of Commons.

While many are disappointed that Labour's Plant Commission on electoral systems decided last month to recommend a non-proportional system, the “supplementary vote” dreamt up by Dale Campbell-Savours and based on the alternative vote, Cook is sanguine.

“My response to the decision is that this is a breakthrough,” he says. “Having spent two years studying electoral systems, the Plant Commission has come to the conclusion that that the first-past-the-post system is inappropriate to the next centu­ry. I welcome that.”

Nevertheless, he is not prepared to back a sup­plementary vote system or any other alternative vote system without major qualifications. “It is in­teresting that a lot of people as individuals who have travelled down the road to reform have moved first through something like the alternative vote. I myself stopped off for a little while at the alterna­tive vote before moving on to proportional represen­tation. We've got to encourage the party collectively to travel down the same path. The party would be wrong to adopt AV or SV on its own. The FPTP sys­tem has polarised Britain by region in terms of rep­resentation. More than 1 million people vote Labour in the south of England and we get a couple of MPs.

“AV and SV do nothing to alter that regional po­larisation, nothing to increase Labour representa­tion in the south. By their very nature, AV and SV give power to second preferences. Labour is rarely the second preference: the party of the Centre witi always be the second preference.                  .. . .

“As a means of electing constituency representa­tives, SV is better than FPTP. But for the system to work, we need to supplement SV with added mem­bers on the basis of regional elections.”

WE CANNOT WATCH AS BOSNIA DIES

Tribune leader, 16 April 1993

Margaret Thatcher is right. The record of the European Community on Bosnia has been an utter disaster and the British government has played a full and dishonourable role in it.

Despite all the evidence that what we are witnessing is a war of Serbian expansionist aggression against Bosnia, a state recog­nised by the United Nations, the EC has persisted for more than a year in the fic­tion that the conflict is a three-sided civil war. What Bosnia needs, in the EC's view, is not the means to defend itself but "cantonisation" and humanitarian aid.

The result, precisely as predicted by Tribune this time last year, has been that the Serbs have continued unmolested to burn, kill, maim and destroy in pursuit of their dream of an ethnically pure Greater Ser­bia. Some Croats have joined in the carve-up, leaving a beleaguered rump under the control of the Bosnian government.

Meanwhile, the United Nations humani­tarian relief effort, although it has un­doubtedly kept thousands of Bosnians from starving, has gone ahead only when it has suited the Serbs to allow convoys through the parts of Bosnia which they have seized. Worse, the UN has increasingly found itself transporting besieged Bosnian refugees to safety, thereby becoming an agent, albeit unwilling, of Serbian "ethnic cleansing".

In the face of all this, the British govern­ment has watched and wrung its hands, smugly insisting that any other course of action would be too dangerous to contem­plate. Labour's response has been miser­ably inadequate: Jack Cunningham, the shadow Foreign Secretary, has appeased the appeasers, never advancing more than trifling criticisms of the government's craven policy.

Tribune has argued consistently that the international community should be defend­ing Bosnia by force of arms and that the failure to do so has been a political capitu­lation to militarist expansionism unprece­dented since the thirties.

Failing military intervention - which, contrary to the "wisdom" of most British politicians, would not necessarily bog down hundreds of thousands of troops in a “new Vietnam" - the least that the world should have done is to allow Bosnia to buy the arms to defend itself.

Instead, a strict arms embargo "on all sides in the conflict" has been maintained. Because Bosnia did not have the arms in the first place, unlike the Serbs, and be­cause it is under siege, without the pervi­ous borders enjoyed by Serbia, this embar­go has acted in the Serbs' favour.

To redress the balance and allow the Bosnians to exercise their right, enshrined in international law, to self-defence, it is es­sential that the embargo on arms sales to Bosnia is lifted at once.

THE HARD LEFT: washed up with nowhere to go

Labour’s hard left meets in Sheffield his weekend to listen to its stars and hew the cud.

It is unlikely to be a particularly upbeat occasion. The hard left is weaker today than at any time in the decade since 23 members of the Parliamentary Labour Par­ty set up the Campaign Group as an alter­native to the Tribune Group in the wake of Tony Benn's unsuccessful campaign for Labour's deputy leadership and Labour conference's decision to establish a register of internal party pressure groups.

Mr Benn is now the only hard left repre­sentative on Labour's National Executive Committee. In the mid-eighties, there were four or five Campaign Group MPs on the NEC. The Campaign Group is smaller than ever before, with few new recruits from the 1992 intake.

Ten years after the publication of its greatest policy achievement, the 1983 Labour manifesto, the hard left has no in­fluence to speak of in Labour policy formu­lation.

It dominates no local councils, plays a leading role in only a couple of trade unions and can command a majority of members in only a handful of constituency Labour parties.

So what has happened to the movement that came so close to taking the Labour Party by storm in the early eighties? Part of the story is that the it was singled out as the "enemy within" by Neil Kinnock and much of Its Trotskyist base was expelled.

Many in the hard left orbit in the early eighties have since left it, either worried about their own political careers or con­vinced that Labour could not win on a hard left ticket.

But it is also true that the hard left has become an increasingly unconvincing and conservative force in Labour politics. In the late seventies and early eighties, all the bright new creative ideas in Labour poli­tics, from alternative defence to worker co­operatives, were coming from what would now be described as the hard left. Today, it seems entirely preoccupied with defend­ing the status quo against real or imagined attack from the right: no to Maastricht, no to electoral reform, no to changing the Labour Party constitution.

It is difficult to imagine a less attractive approach to politics. If the hard left is to regain a role in Labour politics – and it would be good for the party to have a credible far left inside it to keep it on its toes - it has some serious thinking to do about what it is for as well as what it is against. Whether that even begins to happen in Sheffield is another question altogether.

VOTING PROPOSAL SHOULD BE THROWN OUT

Tribune leader, 9 April 1993

Last week's decision by Labour's Plant Commission to recommend the "sup­plementary vote" electoral system for the House of Commons marks a disas­trous failure of nerve.

The supplementary vote, which retains single-member constituencies but allows voters an optional second-preference vote which comes into play only if no candi­date takes 50 per cent of first preferences, is a mechanism for easing tactical voting – and nothing else. It is no more a system of proportional representation than the first-past-the-post status quo.

As such, it is open to the same objec­tions as the status quo. A supplementary vote system would still deliver thumping parliamentary majorities to parties com­manding a minority of votes in the coun­try as a whole. Parliament would still sys­tematically under-represent those who don't vote for the two biggest parties, as well as Labour voters in the south and Tory voters in the north.

The upshot is that the supplementary vote will not convince anyone who thinks that first past the post is unfair – which is the only worry about the electoral system that is at all common among voters.

The Plant decision does nothing to address the widespread (and justifiable) outrage that the Tories have formed the government for more than a decade with­out once being supported by more than 45 per cent of voters in a general election; It does nothing either about the equally widespread sense that there is something deeply wrong when the Liberal Democrats get a handful of MPs in return for one-fifth of the vote or the Greens are denied representation in the European Parliament after winning more than 2 million votes.

Next to all this, any worries that Labour might have about the alleged "dangers of coalition politics" under a proportional representation system – as if Labour were not itself a coalition – are piffling.

To make matters worse, the supplemen­tary vote is even inferior to the status quo in one crucial respect. If voters' second preferences counted in elections, even more MPs would be elected as "lesser evils" than is now the case. It is difficult to think of a more effective way of mak­ing politics even more bland and unpopu­lar.

Far from taking a "step in the right di­rection", the Plant Commission has come up with an old-style Labour fudge that has more to do with MPs wanting to keep their snouts in the Westminster trough than with any consideration of principle. After two years of chewing the cud, it should have done better: one can only hope that the choice of the supplemen­tary vote was not the result of the Labour leadership leaning on the commission, as some insiders have alleged.

When it meets later this month, Labour's National Executive Committee should unceremoniously throw out the commission's recommendation and sign up for the additional member system of proportional representation.

If Labour does not have the courage to embrace proportional representation, its claims to offer a programme of renewing British democracy will be incredible, however much it bangs on about a Bill of Rights and abolishing the House of Lords.

DISASTER FOR THE FRENCH LEFT

Tribune leader, 2 April 1993

The defeat of the Socialist Party (PS) in the French National Assembly elec­tions was worse than its most pes­simistic supporters had feared.

After a performance more abysmal even than Labour's in Britain in the 1983 general election, the party that effective­ly dominated French politics in the eight­ies has been reduced to a rump. The par­ties of the centre-right and right now command a bigger majority than any seen in France since the early nineteenth century.

It would be tempting for Labour to maintain a discreet silence about this rout. The party is already far too readily associated with failure for public discus­sion of what went wrong in France to be particularly appealing for the party leadership.

But Labour must learn the lessons of its French sister-party's debacle for one sim­ple reason: as the Bill Clinton Presiden­tial campaign put it, "the economy, stupid”.

As Angus Mackinnon reports in this issue, the main cause of the PS's disaster was eco­nomic failure. In particular, the PS presided over ever-increasing unemploy­ment, not least because of the franc /or* policy of maintaining the value of the French currency against the Deutschmark.

The problem for Labour, in a nutshell, is that its economic policy for Britain has for several years been the same as that of the PS for France. Since the mid-eighties, when Labour, partly influenced by the PS*s 1983 economic policy U-turn, ditched the one-nation Keynesian interventionism of the alternative economic strategy, both parties have advocated what can be best described as "austerity social democ­racy”, in which mild redistribution and "supply-side" intervention co-exists with a tough anti-inflationary monetary and fiscal stance.

This policy mix served the PS well right up to German unification in 1990. Subse­quently, however, it proved incapable of providing any respite from recession as high interest rates in Germany pushed up those in all the other countries in the Eu­ropean exchange rate mechanism. For the two years before this election, the PS appeared increasingly clueless about how to turn the economy around. Now it has paid the price.

The big question for Labour is whether it would have fared any differently if it had won a late-eighties general election -and it is difficult to avoid the conclusion that it would not. Like the PS, Labour would have been scuppered by German unification, its lack of a credible means of tackling unemployment cruelly exposed.

Some argue that this shows just how wrong Labour was to abandon the one-nation Keynesianism of the AES. But there is no reason to expect that such an approach would rare any better today than it did when the PS tried it in 1981-83. Infinitely more convincing are proposals for Europe-wide counter-cyclical econom­ic policies. Why is it that Labour has had so little to say about them?