The Origins of Labour’s Crisis


The Labour Party is in crisis. Her majesty’s official opposition is currently in the midst of a leadership battle, less than a year after its last one. Many Labour MPs, thousands of councillors and Labour mayor of London Sadiq Khan all back challenger Owen Smith, while embattled leader Jeremy Corbyn enjoys the support of most members, and the majority of the Trade Union movement. The party has all but descended into civil war. Deputy leader Tom Watson is throwing around accusations of entryism and “arm twisting”, while many Corbyn supporters are openly calling for deselection of hostile MPs, and rumours of a split abound. The consequences of this division have been to sink Labour to fourteen points behind in the polls. In the midst of all this, we must ask, beyond personalities, what has caused this crisis in Labour?

It is important to note that this situation is not unique to the UK Labour Party. Across Europe the traditional social-democrat parties of the centre-left are in meltdown, haemorrhaging support to parties of the populist right and radical left. In most of Europe they are locked out of power, and in the few major countries where they remain, they are deeply unpopular: Sweden’s governing Social Democrats recently hit their lowest poll ratings since 1967; Francois Hollande has the dubious title of being the most unpopular French President in history; and Renzi in Italy, even faced with little real opposition, is losing votes to the anti-establishment Five Star Movement and the fascist Lega Nord. What differentiates the Labour crisis is that, due to the UK party system, the radical left insurgency – in the form of Corbyn’s surprise victory last year – came from within the party, not outside of it.

To analyse the demise of these parties we must look at the historic role of social democracy, which emerged in the 20th century as a compromise between capitalism and socialism. It sought to regulate capitalism, rather than replace it. There were three major reasons it was able to flourish: fear of communism; economic conditions which allowed a positive class compromise to occur; and a core constituency of unionised, industrial working class. With the Soviet Union dominating much of Europe, and powerful communist parties in much of Western Europe (especially Italy and France), many were searching for a political alternative to socialism, able to pacify an increasingly militant Labour movement. Thanks to the economic conditions of the postwar boom, including mass employment and rising living standards, companies were able to simultaneously increase wages and profit margins.

As these material conditions which made 20th century social democracy possible broke down, with problems of excess capacity in the 60s and 70s, the collapse of the Soviet Union in the 90s, deindustrialisation and record low levels of Trade Union membership fragmenting their support base, the traditional parties had to adapt. Many followed Tony Blair and Bill Clinton’s “third way” and embraced the market, moving away from social democracy toward a more traditional liberal “welfare capitalist” approach, where they altogether relaxed attempts to regulate or control markets.

This move worked for a while, but after the 2008 economic crash – caused by an unregulated financial sector – many seemed bereft of answers. In many countries, social democrat governments capitulated to the right, following ECB policies and implementing austerity measures with as much willingness as British Conservatives. The effects of these policies have been wage stagnation and decline, high levels of unemployment, lack of job security, and rising inequality. The results of these policies at the ballot box was disastrous.

In the UK, Labour did not appear to know which way to turn. Ed Miliband spoke at the TUC’s 2011 march against austerity, then whipped his party into voting for cuts. His criticism of coalition cuts as “too much, too soon” saw him dubbed as fighting on an “austerity-lite” platform, where he agreed with the central premise of Conservative economic arguments about deficit reduction while remaining critical of the size and scale of their measures. For many, Miliband failed to ever take on the central plank of Conservative economics or provide a clear alternative plan.

This crisis of identity is why Labour’s current state is so bitter. With a changing world, and having lost two general elections in a row, the Labour Party does not know which way to turn: on the one hand, Jeremy Corbyn represents a radical step to the left, a genuine socialist party fighting for an alternative economy. On the other, Owen Smith, a more Miliband figure, represents the party’s soft left and moves to a less radical platform, believing that the UK electorate would reject a candidate such as Corbyn.


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