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Labour’s Crises

The Labour Party's historical crises are rooted in crises of capitalism.

One useful way to think about the Labour Party’s current crisis is by comparing it to the two previous major crises in the party’s history.

All three have followed, and been directly caused by, macroeconomic crises. Labour’s project, as a party of government, has always been the efficient management of a capitalist economy, to foster economic growth, and thereby enable the more equitable distribution of an economic surplus. Absent a growing surplus to distribute, however, Labour is unclear and internally divided on questions of economic policy, and on broader political goals.

As Andrew Thorpe once put it, “during more prosperous times, Labour does at least have something coherent to say: namely, that the fruits of that prosperity should be used in order to create a fairer society … The problem, throughout Labour’s history, is what to do when the economy moves into difficulties.”

Moments of economic crisis and stagnation bring to the fore tensions between the different components of Labour’s coalition. Historically, this coalition has most prominently consisted of: the trade union movement and, secondarily, the cooperative movement; socialists, of a range of different kinds, with centralizing statism largely eclipsing decentralizing syndicalism across the early decades of the twentieth century; and the left wing of the liberal movement, driven by neither socialist ideology nor ties to organized labor, but by a progressivist opposition to the effects of social inequality.

These can – in short – be mapped onto the center (trade unionist / cooperative), left (socialist) and right (liberal / self-described “social democratic”) segments of the party’s ideological spectrum.

The three periods of Labour crisis have tracked the three major economic crises of the party’s existence: the crash of 1929 and subsequent depression; the period of stagnation and stagflation of the 1970s; and the financial turmoil of 2008 and subsequent recession.

Each period of economic crisis and stagnant growth has resulted in civil war within the party, as the unifying project of administering a flourishing capitalist economy and then directing its economic surplus to the working class falls apart. In the first two cases this has resulted in schism and years of electoral disaster. This may well repeat itself today.

In each instance, Labour has been in power during the moment of economic crisis. In 1929 Labour was in government when the stock market crash took place. The party was divided over the wisdom or necessity of austerity policies in the subsequent depression, and this internal conflict ultimately resulted, in the period 1929–1932, in a four-way schism.

The internal defeat of Oswald Mosley’s nationalist Keynesian plan led to Mosley’s departure from the party and his founding of the New Party, and then in 1932 the British Union of Fascists. Ramsay MacDonald, aligning with the liberal right, chose to leave the party, with a handful of others, to form a national government with the Conservatives and Liberals. The Independent Labour Party — representing a significant portion of the socialist wing of the party — chose to disaffiliate, with the ultimate result of parliamentary irrelevance.

The majority rump of the party — the centrists, alongside non-schisming figures from the party’s other wings — persisted, in electoral strife, until the outbreak of World War II, the formation of the wartime coalition government, and postwar electoral success.

Crudely, then, the left, right, centrist, and (in Mosley) proto-fascist wings of the party all chose to go their different ways — with short-term success for the right, long-term success for the center, and electoral oblivion for the splitting leftists and proto-fascists.

In the 1970s Labour was likewise in (and out of) government through the period of stagnation, stagflation, and financial crisis. The Wilson and Callaghan governments’ apparent inability to resolve these crises was widely taken as a damning failure of the “revisionist” Labour right’s technocratic Keynesian approach to economic management.

Again, the party was profoundly internally divided, as the glue that bound together the components of its coalition — a smoothly growing capitalist economy with an easy-to-reallocate surplus — evaporated.

After the electoral loss of 1979 the party was therefore preoccupied by internal conflict. In the early 1980s, however, unlike in the early 1930s, the party did not fracture so thoroughly. There was one major split: in 1981 a significant portion of the liberal (right) wing of the party formed the Social Democratic Party – a progessivist party unburdened by union affiliations or socialist ideology. The remainder of the party — including the portion of the right that had chosen to remain in Labour — spent the following years in civil war.

The Left mounted a serious effort to gain control of the party machinery, pushing for greater influence in both its parliamentary (Bennite) and revolutionary entryist (Militant tendency) forms. Ultimately the leftists were purged (in the case of Militant) and internally marginalized (in the case of the Bennites) and the Right of the party began a long march to internal dominance over an acquiescent center and sidelined left, cemented by the victory of Blair in the 1994 leadership election.

In 2008, Labour was also in government when the financial crisis hit. Again, its immediate handling of the crisis was creditable, but its reputation for competent economic governance was devastated.

Like in the two previous crises, once out of office the party became profoundly divided on how best to respond to recession and stagnant growth. Between 2010 and 2015, under the leadership of Ed Miliband, Labour’s message was confused, as different ideological segments of the party pushed for different platforms. Then, after the 2015 electoral defeat, and the election of Jeremy Corbyn, a representative of the left faction, to party leader, under a new “one member one vote” system, the party moved into open civil war.

Many commentators find a schism of some sort the most likely outcome at present. It is not hard to see some of the same basic themes of the 1930s and 1980s reprised here.

Three economic crises; three civil wars within Labour; and at least two — quite possibly three — periods of splits and electoral collapse. One doesn’t want to overstate the parallels, but this historical perspective does at least make clear that, whatever one’s position within the current internal party conflict, this crisis shouldn’t simply be attributed to superficial — or indeed profound — failings of any ideological faction, but rather to a long-term weakness in the party’s very constitution; the glue that binds it together as an electoral project — and that sometimes fails to.

But the latest crisis has also manifested itself in novel ways.

To begin with, it’s worth stressing that the categories of “left,” “right” and “center” are fuzzy, internally diverse, and historically variable. See, for example, the changing ideological valence, within the party, of attitudes to Europe and to free trade, since the 1970s and the early twentieth century respectively. Today’s left and right aren’t the same as the left and right of the 1930s or ’80s.

Further, the balance of forces within the party is different today than at previous moments of crisis. Paradoxically, the majority of the parliamentary party is today significantly to the right of the historical norm, while the party leadership is significantly to the left. These facts are related: the rightward shift of the parliamentary party has in relative terms reduced the gap between the median selectorate member and the party’s left faction.

Combined with the new one-member-one-vote electoral system, and a leftward shift in the selectorate – partly perhaps due to changing sensibilities, but also partly due to an influx of new members – this has unusually, and probably unstably, aligned a majority of the base with the party’s left. This in turn has led to significant tensions between a large segment of the membership and the majority of the parliamentary party.

Finally, and most significantly, the broader political and ideological context matters. One can differentiate periods of capitalist history — often divided by economic crises — in terms of the governance systems that enjoy broad ruling class consensus.

The period from World War I through World War II is a time of declining liberalism and rising statism — represented by fascism and communism; an increasingly statist understanding of laborism within the labor movement; and the rise of the Labour Party itself as against the Liberals. The period from World War II through the 1970s is a period of Keynesian technocratic governance, the failure of which, in the 1970s, is the (relative) failure of the Wilson and Callaghan governments.

The period from the 1980s through the mid 2000s is a period of neoliberalism — the reassertion of the centrality of the market, privatization, and deregulation. Blairism was an attempt to transform the traditional Labour project by connecting it to neoliberal policy mechanisms and goals.

We are currently in another period (like the 1970s) where the old governance structure (in the 1970s Keynesianism; today neoliberalism) is dead, but a new consensus structure has yet to emerge, or secure its dominance. History is contingent; we do not know what will happen next. But there are concerning signs about the current trends. We are clearly in a populist moment — populisms of both left and right are making dramatic gains against a shrinking, threatened, and delegitimated centrist liberalism.

It appears that the populist right insurgency is stronger than that of the left: fascism, and movements with a “family resemblance” to fascism, are making major gains across the world. One would expect these zeitgeist shifts to influence the balance of political forces both between parties, and within them.

I think many participants in, and commentators on, the current Labour Party crisis are at once overstating the historical novelty of the present situation, and fighting the last war in terms of their understanding of the factions at play.

Figures from the party right frequently characterize members of the left faction as “Trots” and “entryists,” by analogy with Militant’s attempted transformation of the party in the 1980s. This is a poor understanding of the current “left” faction, which is better seen as an alliance between the parliamentary socialist left and its supporters in the membership; the major trade unions — concerned about their waning influence in a party otherwise largely dominated by the liberal, “social democratic” right; an emerging, more youthful, left wing “populist” movement; and a more traditionally centrist base concerned about the parliamentary party’s steady rightward movement. This is, itself, an unstable coalition; but while it lasts, it is a powerful one.

At the same time, the left of the party frequently characterizes its opponents on the right as “Blairites,” in a way that misses the structural transformation of the economy — and, correspondingly, of the ideological terrain — since 2008. Blairism was a project that combined law-and-order demagoguery, neoliberalizing marketization and deregulation, and high welfare spending.

It is dead, in part because in a period of stagnant growth the problem of social wealth distribution moves closer to a zero-sum game, making it harder to enact redistributive policy without threatening the interests of those in possession of wealth and capital.

More profoundly, though, Blairism is dead because neoliberalism is dead; for better or worse, that economic governance paradigm has ended. The question for the right of the party is therefore: what replaces Blairism?

To a large extent the current relative success of the left faction can be attributed to the ongoing inability of the Labour right to settle the answer to that question. And this failure is itself not simply an ideological one — we are still within a structural transformation of the world system, which will ultimately result in a new global power and governance structure.

Political actors can attempt to influence that transformation, but they cannot individually resolve it; and the ideological superstructure that informs policy-makers’ actions is itself strongly influenced by the political-economic base.

Nevertheless, answers are being proposed to the question: what replaces Blairism? One prominent answer is captured by the recent book Labour’s Identity Crisis, edited by Labour member of parliament Tristram Hunt. Contributors to that book argue that Labour has lost the confidence of many of its traditional voters because its technocratic, economistic emphasis on wealth redistribution has neglected the “identity politics” of “white working-class” patriotic pride in Englishness. Hunt and other contributors emphasize that Englishness should not be understood in terms of ethnicity, but rather as a form of class solidarity grounded in local community and place.

Yet for many on the left of the party — and that includes myself — this “English identity politics” project seems to amount, in practice, to a Labour variant of the anti-immigrant, xenophobic and racist nationalism that has informed a significant proportion of the recent UKIP, and Brexit, votes.

The worry here is that where Blairism proposed a Labour that could operate effectively within the neoliberal paradigm, the advocates of “English identity politics” aspire to create a Labour that can operate effectively within an emerging right-populist paradigm.

Further: right or centrist efforts to minimize the influence of the party’s left faction, in the hope of reestablishing something closer to a Blair-era liberal social-democratic project, may instead risk opening the door to a highly illiberal valorization of ethnic solidarity.

This is, of course, a risk, not a certainty. But — to put it crudely — where some on the Labour right fear a return of Militant, those of us on the left may worry about a return of Mosley.