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

40 thoughts on “Red Labour must address the elephant in the room

  1. This is an excellent insight into the problems we face and need to address if we are really to make the necessary changes which need to be made. It is chilling to consider that the current policies of privatisation could not be reversed. Assets resulting from the public purse stripped away forever? It is a discussion which needs to be had out in the open, and the arguments presented to the electorate. Whatever the outcome of a referendum we need clarity and transparency.


    • I’d agree with much of the historical analysis of this piece, but not its conclusion. The EU has indeed been hijacked by the neoliberals, but rather than throwing our hands in the air and handing it over to them for good, we ought to be leading the fight to reclaim it for the European left. Socialism (or even moderate social democracy) will always be fragile when realised only “in one country”.


      • If Tories (or even Blue Labour) want to be Little Englanders then let ’em. I think it would be regrettable if Red Labour went the same way. With enough energy and determination, what has been done can be undone. The left should have its eyes on the long-term.


      • The single currency will always be a disaster – economies as diverse as Greece and Germany cannot thrive under one common interest rate.

        The EU Parliament is distant and undemocratic.

        Instead of trying to make the impossible possible (who really wants a United States of Europe?) why not go back to independant currencies, sovereign (democratic) law making, and co-operation on issues like the environment?


      • I completely agree with Peter, if only adopted in isolation it would be far too easy for the neo-liberal right to dismiss Socialism as “loony left”. The only way forward is to harness the widespread discontent with free-market capitalism (see occupy) and form a new social democratic consensus across europe, make the Tory party the “loonies” for once.


      • I’d go with any international resistance to the global corporations. The question is why have governments given up their power to the Bond markets and the global financial elites?


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  8. Neo-Liberalism has been adopted by all western governments including new labour, monetarism has been the vehicle used to transfer state assets into the hands of the few. Unless the current Labour leadership realise that they should return to traditional Labour economic thinking and take direct control of the economy, they will ultimately fail, they must grasp the nettle or the unions should withdraw their support and re-establish a new party soon.


    • Mervyn. I agree with you. So too, would an overwhelming majority of the grassroots LP and, if they were less uninformed and misinformed by the media, so would the electorate. The PLP is still suffering from the legacy of New Labour. Possibly 50% of the MPs are, in my opinion, in the wrong party. The country has been very badly served. New Labour/Tony Blair opened the door for the City of London to walk into Downing Street in the guise of the Tory multimillionaires …. and we see the culmination of the Thatcherism and the Third Way.


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  10. @syzygysue
    Thank you!
    – not just for this superb article, but for all the sterling work which you do! Your knowledge far exceeds mine, but I’m learning all the time.
    This article is very educational to me, as it provides exactly the kind of detailed information which I would otherwise lack.
    Alas, it didn’t surprise me; I know enough already to appreciate roughly what’s going on and how the world has been going to the dogs for 30 years.
    In an interview about 5 years ago, the singer/ musician Robert Wyatt lamented : “there are so many good people in the world – but wherever you look, the world is being run by a tiny minority of bastards”. He spoke with feeling!

    I totally agree with your statement that the majority of the British electorate – “if they were less uninformed and misinformed by the media” – would be prepared to support the Labour Party (or any new party formed) if it was opposed to neo-liberal economics and committed to being a bastion against the transnational elite.
    The challenge for the Left is to share the relevant info around and about – to inform and to educate, as the knowledge itself would do the persuading.

    The specific challenge for Ed Miliband is to tackle and overcome the stubborn resistance of the LP’s Blairite/ Progress right wing – if he has the courage to grasp hold of the thorns beneath the Labour rose. He has a great opportunity now, with the power to make changes of personnel (and position) within the shadow cabinet.


  11. Phil C Thank you. I thought you might also be interested in Professor Michael Hudson’s take on the EU:

    ‘the EU is turning out not to be the peaceful and basically socialist project anticipated half a century ago, when the European Economic Community was formed in 1957. It is a financially bellicose, extractive attempt to create a financial oligarchy and impoverish Europe, stripping the assets of debtors to pay creditors….

    The euro is threatening with being pulled apart by the greed, short-sightedness and ideological extremism of the anti-debtor, anti-labor neoliberals who have gained control of the legal system and much of the political system.’

    Strong but IMO true.


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  19. The EU is the world’s largest single market, but where market forces are tempered by common rules on consumer protection, environmental standards, some social and employment rights, competition (ie anti-monopoly) policy and regional policy. Unlike the WTO (or NATO, OECD, UN, or any other international structure), it has an elected parliament which (now, after many battles) has the final say on almost all EU legislation. In that parliament, there are significant left-right battles, but the UK Conservatives are pretty isolated. If you want to tame international market forces, then the EU is a battle ground with more prospects for success than most. It should be used, not abandonded.


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