OPINION: Which ‘way’ for Labour?

COMMENT

The election of David Cunliffe to the position of Leader of the Labour Party has been accompanied by discussion of a “lurch to the left.” Cunliffe has contributed to this by talking about his intention to lead a “red” Labour government and by delivering well-received speeches to trade union audiences.

Recent polls indicate that the formula is working. In a very short period of time a Cunliffe-led Labour Party has gained momentum and has commentators talking about a possible new Government. This turn of events comes on the back of a novel leadership selection process.

After a shaky start, the contest between three contenders, all of whom grew in stature during a series of debates, galvanised a dispirited party and attracted the attention of voters. The debates between the leadership contenders focused heavily on the kind of Labour Party they wanted.

Shane Jones emerged as the champion of the “800,000 Labour voters who did not bother to vote at the last election” and a business-friendly approach. Grant Robertson was seen as a strong supporter of the public sector and a community-centred approach. David Cunliffe managed to tap into both positions by combining references to socialism with a backstory that emphasised his business credentials.

'Third Way' rejected
Something all candidates made clear was that they had no intention of looking back to old policy platforms. They stood for the future and specifically ruled out any talk of a “Third Way” – the pathway associated with the last Labour government.

Fair enough. Every generation of political leaders wants to put their mark on the party they lead. Titles like “Third Way” are, after all, no more than shorthand for a policy mix advocated at a particular time. Looking for a new way to describe what is being put forward is only reasonable.

Yet, care needs to be taken not to confuse labels with substance. Ever since the rise of Margaret Thatcher in the UK and Ronald Reagan in the US, the centre left has struggled to find a confident place for itself on the reshaped political landscape. Before Thatcher the centre left represented the Welfare State and a regulated economy. Thatcher smashed this kind of thinking in Britain and spread her influence around the world.

Centre left politicians found it very easy to criticise Thatcher but not so easy to provide details of their alternative policy agenda. The entry of a possible Third Way into the debate in the 1990s offered hope that centre left parties might finally get their political act together. In fact, there was a flowering of governments led by Third Way figures like Lionel Jospin in France, Gerhard Schroeder in Germany, Wim Kok in the Netherlands, Bill Clinton in the US and Tony Blair in the UK.

It looked like various shades of the centre left were back in charge across the democratic world. There were clear differences of opinion between these politicians but they did share an approach that accepted globalisation, markets, flexibility, the need to control spending and cut deficits.

These ideas caused alarm among traditional supporters of centre left parties in the 1990s and they still do. More palatable were the accompanying ideas that began with what is today called “predistribution.” That is, if change is inevitable policies must be in place to make it easier for people to get new jobs and earn a decent income.

This approach also led to a strong emphasis on such policies as improved education, opportunities for life-long learning, R&D, investment in regional economies, a “working families” tax credit, a higher minimum wage, childcare, health care and public service jobs.

Contradictory agenda
Anyone who has anything to do with politics can see at a glance just how difficult this agenda is to implement. On the one hand it accepts that economies are opening up and that this will create winners and losers. On the other it advances policies that require significant investment to ensure everyone can thrive in an open economy. Building a stable, long lasting political consensus out of what might appear to be policies that belong to two distinct political positions is not easy.

And so it proved to be. The politics of the Third Way defeated both Clinton and to a greater extent Blair. Their right leaning supporters thought they did not do enough to free the market while their left leaning supporters thought they did little more than take the sharp edges off the neo-liberal project.  Tiny Symbolic Gestures (TSG) as critics called this softening of free market policies.

This was a catastrophe because it allowed the finance version of capitalism to create the Global Financial Crisis, increase inequality and collapse any sense of a fair society. It also pushed off the agenda the other vitally important issue that Third Way politicians had begun to pay attention to – namely the environment.

The result is the state of western democracies that we see about us today. Third Way politics offered a way forward but it proved to be an opportunity lost.  Even in New Zealand, where so much progress was made that the world had begun to take as much notice of the Third Way experiment as it had of the earlier neo-liberal experiment it proved to be too difficult.

The essence of the problem is not hard to spot. Those who benefit from an open economy have to be prepared to pay enough tax to allow for investment in economic and social policies. They have to pay for the advantages they have been given. They have to understand that their success came from shared effort and that they should ensure everyone will share in the benefits.

Third Way governments struggled to secure this ground. Those who benefitted tended to argue that they were the authors of their own success and they owed nothing (or at least not much) to anyone. As a result the market economy did what it is designed to do by creating a society where the pursuit of material self-interest became the overriding aim for too many people. 

Can this change? I suspect the new Labour leader is thinking about this very problem as he contemplates the future. He should be. A centre left government that adopts the traditional model of protecting New Zealanders from the realities of the marketplace and the need to control spending  (the First Way) will be defying reality; one that accepts a market-based deregulation agenda (the Second Way) will quickly lose touch with their supporters.  

Call it what you will, but a Third Way approach is what is needed. It can, however, only get off the ground if a new social contract can be struck between the winners and losers in an open economy.  The formulae must not just allow but encourage productive entrepreneurship (as opposed to finance entrepreneurship) while at the same time investing heavily to ensure everyone can take their place in the new society.

Without underestimating the challenge this represents, there is reason for optimism. The  neo-liberal experiment did not work and its believers are now confined to such odd groups as the Tea Party. The promised land not only failed to arrive, something decidedly worse did. The sense that basic values like fairness and getting what you deserve are being undermined is concerning more and more people.

At the same time calls for a return to some golden era are seen as nostalgia. People are realistic about the world in the 21st century but they want a better deal for everyone.

It is for this reason that the Third Way, or whatever it might now be called, is still relevant. The world has changed. Old positions do not work anymore. We urgently need a way forward that will allow us to work together to build something better. The failure of the Third Way wasn’t its policies, it was its politics.

Steve Maharey is the Vice Chancellor of Massey University, a sociologist and former cabinet minister in Helen Clark's Labour government. He is an advocate of Third Way policies.