Red Labour must address the elephant in the room

Contribution by Sue Davies


Barely 32 years ago, Margaret Thatcher came to power and rejected the post-war consensus by embracing Hayek, Friedman and neoliberalism … but in those three decades, globalization and the deregulated free-market has become a TINA (Thatcher’s slogan “There is no alternative”)… an unquestioned consensus for the overwhelming majority of the media and leading politicians from all three mainstream political parties.  This is a false consciousness which has had dire consequences for democracy, sovereignty, and a world effectively run by transanational corporations with governments just facilitating their businesses.

Strangely (or perhaps not), these implications of the major shift in economic strategy have never been much discussed publically.  There was also precious little debate in the House of Commons, prior to the Thatcher government promoting and signing up to the 8th round of the GATT (General Agreement on Trade and Tariffs) treaty in Uruguay in 1994.  This treaty extended the scope of the previous one beyond manufactured goods to cover services, agriculture and intellectual property, including services such as health, education and other public provision, and environmental ones such as GM foods, nuclear power and agribusiness.

The lack of discussion was particularly extraordinary because effectively this treaty created the World Trade Organisation (WTO)  to be a power above Nations … the ideas and regulation of free-trade superceding national governmental decisions and policies.  The free-market ideology of Friedman, the economic heretic of the 50s-70s, became enshrined by 117 member governments, representing 90% of world merchandise. (1)

With the advent of Globalization with its fundamentalist insistance upon open markets and free access for capital without restraints, there were suddenly no regulations to bind the Financial Class , no taxes they could not avoid and no political process they could not buy. It was a freedom from any notion of obligation, care or concern for anybody but themselves. It was a perversion of the very word freedom. They could vote wherever they chose, buy citizenship wherever they felt like it and pay only those taxes they found convenient and have no loyalty anyone or anywhere. They were ‘free’. (2)

As David Malone writes in the above quote, the Financial Class were set ‘free’ … but the rest of the global community was well and truly ‘stitched up’.   It is no coincidence that in the UK and US, there has been a corresponding lack of rise in real wages and huge increases in personal debt.  Meanwhile, the 1000 richest list published  the other day shows that their wealth has increased 18% since last year and they are now worth 400 bn.

Blair’s election in 1997, offered the possibility that the economic strategy of the British State could be steered back to the publically popular post-war consensus of a mixed economy and the welfare state.  However, in spite of Blair’s rhetoric, many commentators agree that Gidden’s ‘Third Way’ was little more than a thinly veiled front for an accomodation with Thatcherism … there being more continuities than differences.(3)  A good example would be the creeping privatisation of the NHS under New Labour, well documented by Allyson Pollock in her book ‘NHS plc’ (4), and in many ways (and not good ways), the health reforms of Andrew Lansley are indeed evolutionary not revolutionary.  Not only did Blair leave the door ajar, his McKinsey advisor now heads Monitor, the regulatory body.

It is clear that New Labour was/is fully committed to neoliberalism, the ideology of the free-market, but worryingly a future government wanting to nationalise or re-nationalise public services may find  that  it is legally prohibited, under GATS legislation.

Linda Kaucher (8.01.09) wrote of the danger of the DOHA round of GATS:

The General Agreement on Trade in Services (GATS) deregulates finance. It also prohibits any reversals of public service privatisations, or renationalising of any service that have been opened to overseas investment.

Alternative proposals and plans, whether Green, blue or pink, are misleading if they fail to take real account of the challenges in the structural relationship between the national, the EU, and the international trade framework. Such proposals, however well meaning, will not just be frustrated but legally prohibited through the structures described here. (5)

The current status of DOHA is not clear.  On the 25.04.11, Larry Elliott of the Guardian reported that DOHA was collapsing … but it seems that it is still possible for particular sections to be agreed seperately.  Secrecy and befuddling of the issues is clearly the standard strategy for avoiding public disquiet.  The history of GATS  and the WTO, both instigated in 1995 by transnational capital, mainly Citicorp, AIG, and American Express, is one of hidden agendas.

The task of Red Labour is to explain  how the huge institutional blockage of neo-liberal capitalism is to be tackled.  As Michael Meacher blogs (6) Blue Labour has no answers … and Purple Labour is quite happy to see the system persist.

Red Labour should sign up to holding a referendum on EU membership with a view to withdrawing or renegotiating our relationship.  The EU is not the idealistic coming together of geographically close nations to create common good but via the GATS treaty it has become the vehicle for imposing the needs of transnational corporations throughout the region.  It is worth remembering that 50% of UK laws derive from the EU and most EU derived laws are passed without debate or votes in parliament because of the use of statutory orders.  Furthermore, elected representatives in the member states cannot reverse laws once they have been passed as EU law is supreme.  Other issues such as whether the railway system, postal services and other public services should be in the private or public sectors, many areas relating to civil liberties, the environment or the degree to which the economy should be regulated, have been effectively removed from democratic debate in the EU member countries and handed over to Brussels.  Removing the UK from the straitjacket of EU neoliberal policies would be a major step in undoing the huge institutional blockage of neo-liberal capitalism … ‘The elephant in the room’

(As individuals, we can act now and make our views felt by signing up to The People’s Pledge calling for a referendum on the EU.


Pollock, A.M. (2004) ‘NHS plc – The privatisation of our health care’  publ. Verso, ISBN 1-84467-539-4