Martin O'Neill: Labour After the Earthquake

Labour After the Earthquake By Martin O'Neill / 27 June 2016 Martin O'Neill, Senior Lecturer of University of York, analyses the response from the Labour right against Jeremy Corbyn. As I write these words at 2 pm on Monday 27 June, the parliamentary Labour Party’s coup against their current leader, Jeremy Corbyn, looks unstoppable, with more than twenty shadow ministers offering their resignations. Those quitting include not only those identified with the right and centre of the party, but also a number, such as Angela Eagle, Lisa Nandy and Owen Smith, associated with the party’s soft left. Corbyn’s days as leader may be numbered, but Labour has an enormous task on hand to offer the country a vision of how to move forward from the political and economic earthquake of the Brexit vote. Labour's behaviour in the wake of the referendum result has been, so far, extremely poor. Instead of a big, imaginative response that could show a way forward for both "the 48%" who voted to Remain and the disadvantaged Leave voters (who are about to get a vivid sense of the emptiness of the Brexit campaign's promises), the dynamics of the internal coup suggest a party that has the fatal habit of turning inwards at time of crisis. The great danger is that Labour’s internal divisions may leave a void at the top of the party, just when political direction from Labour is most badly needed, and just as the Tory party is itself in a condition of blank disarray. The fault lies with both sides of the party. Corbyn's own antipathy to Europe, together with his tactical and strategic weaknesses, means he hasn't offered enough to other sections of the party to keep them bound to him, so his defenestration now seems certain. It should be borne in mind that too that the demographic groups which propelled Corbyn to his victory in 2015 – more likely to be younger, multicultural in outlook, and living in larger cities – are exactly the groups that voted most strongly for “Remain” and are most dismayed by the outcome of the referendum. For this reason alone it would seem unlikely that Corbyn could now manage to attract the level of support among the broader party membership as he was able to command in last year’s leadership election. Nevertheless, the worry remains that all that will be on offer from Corbyn’s opponents would be a kind of Blairite revanchism with nativist trimmings: a trailing response to the pathologies of the current moment, instead of a vision of how to move beyond this mess. Labour needs to address the deep economic causes of anti-immigrant sentiment, not just deal with its effects. Insufficient numbers of the current parliamentary party have, as yet, shown that they're really up to the task at hand, or have shown that they are able to think beyond the political landscape of the 1990s. It would be a crushing shame if John McDonnell's imaginative economic programme, which is ambitious, resolutely anti-austerity, and involves the structural reorganisation of important aspects of the UK economy, with a different remit for monetary policy, and the creation of regional development banks, were to be jettisoned in the party’s rush to depose Corbyn. McDonnell’s impressive economic programme, -- or something very like it – could constitute a big enough ‘offer’ to working-age people left behind by the current shape of the economy. It would be political vandalism if it were to be junked and replaced by something an order of magnitude less imaginative (on which, see the 2015 leadership campaigns). Whoever emerges as Labour’s leader after the dust has settled will be dealing with a country riven by deep inequalities and divisions, and crying out for leadership and a bold vision of how to move on from here. McDonnell’s evolving economic plan has much that Labour should develop, whatever its future leadership, just as McDonnell and his team can themselves be seen as offering not so much a hard break from the Miliband era, but a further development of some of the best ideas, of using forms of predistribution to tackle the root causes of inequality, on which Miliband’s team had worked. McDonnell has realized that, in the post-crash era of quantitative easing, in which macroeconomic policy is made as much by central banks as by finance ministries, parties of the left can no longer leave monetary policy to the technocrats. His commission examining the workings of the Monetary Policy Committee, chaired by former MPC member Professor David Blanchflower, should be central to Labour’s future economic thinking, and should not be ignored by any post-Corbyn leader. Similarly, McDonnell has asked Professor Prem Sikka to report on the future functioning of HMRC, and Lord Kerslake, a former head of the UK civil service, to report on the functioning of the Treasury, and to investigate the case for its future division into separate ministries of finance and economic development. This fundamental work will allow Labour to think more seriously about the future of a progressive macroeconomic policy. As well as needing to reach out to the 48% of the population who voted ‘Remain’ and the millions, especially among younger people, who wished they had done so, Labour needs to speak to those who voted for Leave out of a sense of economic desperation. The sense of economic hopelessness that drove voters into the arms of the ‘Leave’ campaign in the northeast, south Wales, parts of Yorkshire and the East of England, and in many coastal towns, can be addressed only by an ambitious return to forms of industrial policy that direct investment towards areas that need to retool their economies. Plans for regional development banks under Miliband have been further developed under McDonnell, with the thinking of his team being much informed by the work of Professor Mariana Mazzucato, and her book on the Entrepreneurial State. Any future Labour strategy for regional economic development must also follow McDonnell in supporting innovative Labour councils, such as Preston City Council, which has looked for ways to develop the local economy through growing the cooperative sector, and using the power of procurement spending by the local authority and other local ‘anchor institutions’ in order to encourage an ecosystem of local enterprises to grow and thrive. Corbyn was the strongest candidate for the Labour leadership last year, because only his campaign of the four seemed prepared to think at the right scale about the challenges of inequality and economic marginalisation. Throwing out the best and most popular features of Corbyn's programme now would be self-defeating in the extreme, whoever is to be Labour’s leader into the next election. This moment demands serious and decisive thinking from Labour on ideas, policy and strategy. Labour needs to be the party of the 48% and the party that offers a real solution to those who voted for Leave because they wanted to do anything they could to create some hope in their economic prospects again. Small-bore tit-for-tat jostling is deeply inadequate to the enormity of the situation at hand. Labour politicians need to grasp the opportunity to give the country the leadership it desperately needs, and to elaborate a way forward that is both anti-austerity and pro-European, and which can rescue the country from the political and economic disaster into which it has been flung by the cynicism, lies and misdirection of the ‘Leave’ campaign.