The crisis that has engulfed us since 2008 has certainly given new confidence to the left and centre-left in challenging the neoliberal orthodoxy. Given New Labour's wholehearted commitment to that orthodoxy, the present Labour leadership has been hampered by the government's success in blaming it for the supposed debt crisis, and has struggled to give voice to a coherent alternative to austerity. It has been left to progressive think-tanks, unions and left academics to fill the gap, and to try to shift the economic policy debate towards a genuine alternative to the coalitions austerity programme, which at the time of writing (February 2012) is leading Britain steadily back into recession.
In October 2011, the pressure group Compass launched an alternative economic programme entitled Plan B: A Good Economy for a Good Society at a meeting in the UNISON headquarters in London. (1) The document, edited by Howard Reed and Compass secretary Neal Lawson, was put together between March and September 2011. Contributors were recruited from the Compass-based New Political Economy Network (2) and other think-tanks such as the New Economics Foundation. Some 25,000 words in length, Plan B seeks to provide both a critique of the coalitions economic policies since the 2010 election, and alternatives for socialists and centre-left progressives. It was especially intended to influence policy directions in the Labour Party, and thus has no pretensions to being an anti-capitalist or 'transitional' programme. It covers fiscal and monetary policy, banking and finance, taxation, industrial strategy and business regulation, together with economic aspects of policies on the environment, welfare, jobs and workplace management. Given this extensive scope, most of the policy proposals were written as platforms for further detailed development.
In some respects, this initiative harks back to the Alternative Economic Strategy (AES), which was advocated by the left within the Labour Party and the unions after the election defeat of 1970 (London CSE Group, 1980; Aaronovitch, 1981). The end of the postwar boom saw the return of mass unemployment, rising inflation and the start of deindustrialisation in Britain, in the global context of the breakdown of the dollar-gold standard and the wider Bretton Woods order of fixed exchange rates. These developments broke apart the postwar 'Butskellite' consensus, based upon Keynesian demand management and the mixed economy, leading to sharp confrontation between a resurgent right-wing monetarist orthodoxy, and the AES seeking to extend public ownership and economic planning (Gamble, 1981).
Within the Labour Party, this was central to an equally sharp divide: the left in the party, eventually led by Tony Benn, won control of the party's policy-making process on the basis of the AES, with the support of the still-powerful trade unions. However, the 1974-9 Labour cabinets of Wilson and Callaghan were dominated by social democrats such as Crosland, Healey and Williams, and consistently adhered to orthodox policies rather than the AES (Wickham-Jones, 1995). This ideological divide was broadly matched by the divide over the referendum on EEC membership in 1975. Following the formation of the breakaway Social Democratic Party in 1981 and Thatcher's second electoral victory in 1983, the Labour Party began the rightward shift that culminated in New Labour, while the trade unions withered under the onslaught of mass unemployment and anti-union laws. While left economists tried to sustain a radical policy alternative to neoliberalism (Cowling, 1990; Michie, 1992), they were marginalised within Labour and the TUC, eventually settling for advocacy of a 'social market' capitalism along German lines (Hutton, 1995). However, even the watered-down version of 'stakeholder capitalism' (Kelly et al., 1997) was far too left-wing for Brown, Blair and most of the New Labour leadership, dazzled as they were by the wealth and power of the City and its media champions.
It remains to be seen whether Plan B will lead to an alternative as detailed, coherent and hotly debated as the AES, but the latter provides a good point of reference, while taking due account of the very significant changes in British capitalism since the 1970s. Perhaps the most important change is that, as a result of the complex developments summed up in the word 'globalisation', it is even less likely than it was then for an 'alternative in one country' to succeed. (3) Equally...