THE CONSERVATIVE/NEO-LIBERAL MOMENT

New Labour has picked up where Thatcherism left off: Blair's project has been to absorb social democracy into neo-liberalism (Stuart Hall, August 6, 2003, The Guardian)

The Labour election victory in 1997 took place at a moment of great political opportunity. Thatcherism had been rejected by the electorate. But 18 years of Thatcherite rule had radically altered the social, economic and political terrain in British society. There was, therefore, a fundamental choice of direction for the incoming government.

One was to offer an alternative radical strategy to Thatcherism, attuned to the shifts that had occurred in the 1970s and 1980s; with equal social and political depth, but based on radically different principles. What Thatcherism seemed to have ruled out was another bout of Keynesian welfare-state social democracy. More significantly, Thatcherism had evolved a broad hegemonic basis for its authority, deep philosophical foundations, as well as an effective popular strategy. It was grounded in a radical remodelling of state and economy and a new neo-liberal common sense.

This was not likely to be reversed by a mere rotation of the electoral wheel of fortune. The historic opportunities for the left required imaginative thinking and decisive action in the early stages of taking power, signalling a new direction. The other choice was, of course, to adapt to Thatcherite, neo-liberal terrain. There were plenty of indications that this would be New Labour's preferred direction. And so it turned out. In a profound sense, New Labour has adapted to neo-liberal terrain - but in a distinctive way. [...]

New Labour has a long-term strategy, a "project": the transformation of social democracy into a particular variant of free market neo-liberalism. Thus New Labour has worked - both domestically and globally - to set the corporate economy free. It has renounced the attempts to graft wider social goals on to the corporate world. It has deregulated labour and other markets, maintained restrictive trade union legislation, and established weak and compliant regulatory regimes. It has "cosied up to business", favouring its interests in multiple ways. It has pursued a splendidly variable range of privatisations - sustaining the sell-off of critical public assets and stealthily opening doors for the corporate penetration of the public sector.

However, New Labour has adapted the fundamental neo-liberal programme to suit its conditions of governance - that of a social democratic government trying to govern in a neo-liberal direction while maintaining its traditional working-class and public sector middle-class support. It has modified the anti-statist stance of American-style neo-liberalism by a "reinvention of active government". "Entrepreneurial governance", its advocates advise, promotes competition between service providers, favours the shift from bureaucracy to "community", focuses not on inputs but on outcomes, redefines clients as consumers and prefers market mechanisms to administrative ones.

Far from breaking with neo-liberalism, "entrepreneurial governance" constitutes its continuation - but in a transformed way. The New Labour orthodoxy is that only the private sector is "efficient" in a measurable way. The public sector is, by definition, "inefficient" and out-of-date, partly because it has social objectives beyond economic efficiency and value-for-money. It can only save itself by becoming more like the market. This is the true meaning of "modernisation". Marketisation is now installed in every sphere of government. This silent revolution in "governance" seamlessly connects Thatcherism to New Labour.

The passing-off of market fundamentalism as the new common sense has helped to drive home the critical lesson which underpins the "reform" of the welfare state: the role of the state "nowadays" is not to support the less fortunate or powerful but to help individuals themselves to provide for all their social needs. Those who can must. The rest must be targeted, means-tested and kept to a minimum of provision lest the burden threaten "wealth creation".

To a significant extent this is what Compassionate Conservatism or the Bush Project or whatever you choose to call it is about. One of the few times I've ever had really emotional arguments with friends over politics was in 1992, when a fair number of conservatives voted for Bill Clinton, justifiably outraged that George H. W. Bush had raised taxes after pledging not to. That election seemed likely to be the most significant since the Great Depression because a post-Cold War boom was going to make it possible to reduce federal spending and would afford an opportunity for the party in power to begin re-privatizing the Welfare State. Whichever party enjoyed this once in several generations opportunity could then become a majority party for several decades, having given people the social net and thereby the security they desire, but using free market forces to do so, granting them the freedom they treasure.

Bill Clinton seemed an especially fateful personage in this regard, because his New Democrat mantra was in many ways more devolutionist than the Senior Bush's paternalist Republicanism. But Clinton started badly, with his Hillary Health Care monstrosity and from then on--other than welfare reform, which the GOP crammed down his throat--would not so much as contemplate any major new initiatives. This was tragic because the easiest political alignment to get things done with when it comes to major social welfare changes is a GOP Congress and a Democratic president--kind of an only Nixon can go to China thing, except that, in addition, only the Chinese (the Republicans) are actually willing to reform entitlements. In the 2000 election, Al Gore who had been a New Democrat of some iteration or another at some point, reverted back to New Deal/Great Society form and it became clear that the Democrats would not be the ones to revolutionize the State.

George W. Bush, however, seized on what he called "compassionate conservatism" and proposed things like beginning the privatization of Social Security and giving kids school vouchers and suddenly the game was afoot again. The challenge from John McCain was frightening, because the Senator would have had a far easier time being elected, but he never would have proposed any reform that the NY Times editorial board would have criticized him for. The maverick was in fact the candidate of the status quo. George W. Bush survived this challenge but it made his task of being elected even more difficult and he ended up with such a small majority, and then a minority, in the Senate that real reform was mostly doomed. He did manage to get a voucher program through in the No Child Left Behind Act, because Ted Kennedy and George Miller didn't really grasp what was going on, but Social Security and health care will have to await a filibuster-proof majority after the '04 election or, if that doesn't come to pass, we may, as a nation, have blown our best opportunity to create a set of truly supple and responsive institutions that can help people get through sickness, unemployment, hard times, and retirement while still vindicating--for the most part--the freedoms on which the republic was premised. Posted by Orrin Judd at August 8, 2003 9:55 PM