Election should be about vision of new economic order – Is Labour ready?

It is ironic that the Tories, the enemies of ideology and avowed exponents of pragmatism, are starting this election with a much stronger ideological pitch than Labour, normally the proud presenter of an alternative vision. Osborne has gone on the offensive immediately by advocating the balanced budgeting and small state goals of the 1920-30s aimed at shrinking the State and consolidating the power of capital over labour, but which would cripple growth exactly as it did a century ago and restore the Downton Abbey society of that period. It is a hideous scenario and should be hammered to bits, but it does at least offer a scenario of the trajectory of Tory policy, were they to win. For Labour , against that background, the incentive to offer the vision of the new economic order should be compulsive.

What is really central to this election is the replacement of the failed free market ideology, or Washington Consensus, which underpinned the postwar US economic hegemony. The EU powers have been determined since the 2008-9 crash to prop up this failed model at any cost because their own power and survival depends on it. But it is becoming clear that the old order is irrecoverable and the world will not revert to the status quo ante. Partly this reflects the changes in the global power structure that have been unfolding over the last decade or more, particularly the rise of China as an increasing counter-weight to US unilateral dominance and the undermining of US military supremacy from the reverses in Iraq and Afghanistan, but also the steady slide into deflation in the Eurozone prompted by a rigid German mercantilism.

But the old order cannot hold. The Greek elections on 25 January will likely bring to power the Syriza party whose meteoric rise to prominence derives from an electorate repudiating the burdens of maintaining the old order as a price that is now intolerable. Podemos in Spain could soon move down the same track. The spread of alternatives to neoliberal capitalism is not just confined to the Eurozone; the surge of progressive reform that has swept Latin America has successfully challenged neoliberal principles in several states.

In the UK Ed Miliband has bravely advocated an alternative to predatory capitalism. But this needs spelling out in a compelling narrative. Above all, if it is to be credible, it must entail a change in the power structure without which talk of radical economic reform is vapid. It must mean challenging the power and role of the banks, restoring the public sector as a key player in a new relationship between State and markets, reversing the excesses of privatisation, and tackling the fundamental causes of extreme inequality by changing the balance of forces in industrial relations. Is Labour ready?