Ed Miliband’s Polanyian problem

‘One Nation’ politics might resuscitate the Labour Party, but it risks disguising real divisions within British society

Scott Lavery
Scott Lavery

Ed Miliband’s first act as Labour Party leader was to affirm that the old was, indeed, dying. After fifteen years of credit-fuelled growth and deregulation, the economy had tipped into the Great Recession. Miliband recognised that the Third Way had passed. In order to transform the British economy, he would firstly have to ideologically rejuvenate his own party.

And yet ‘Red Ed’ worked extremely hard to demonstrate that the great Labour turnaround would not result in a resurrection of the party’s post-war past. In an age of tight fiscal constraint and global economic uncertainty, there would be no return to the discredited Keynesianism of previous ‘Old’ Labour administrations.

Miliband’s leadership rests on a rejection of two major pillars of his party’s modern history. His challenge has been to carve-out an intellectual space through which the Labour party can reverse its electoral decline.

The ‘One Nation’ platform is the culmination of this effort. It’s the frame through which Labour will fight the 2015 election. But will this provide the basis for a parliamentary revival of the Labour party? Does ‘One Nation’ provide a realistic alternative for those who’ve been failed by years of neoliberalism?

The most common criticism of Miliband’s vision is that it remains just that – a vision. Undoubtedly the Labour party will have to develop a clearer policy platform before the next election. Nevertheless, it’s worthwhile taking a step-back and providing a genealogy of the ‘One Nation’ prospectus.

Labour’s new vision is rooted in the political economy of Austrian political economist, Karl Polanyi.  In the early days of his leadership, Miliband embraced the ideas of Blue Labour – an intellectual current within the party strongly influenced by Polanyi’s analysis – which critiqued the centralising tendencies of both Blairism and Keynesian demand management.

Blue Labour, led principally by Labour peer and Polanyi scholar Maurice Glasman, argued that the free economy and strong state had eroded the traditional bonds of British society. Ordinary working people had been stripped of their sense of ‘place’ and security by unrestrained market forces, as successive UK governments embraced Thatcherite reforms.  A distant and yet intrusive technocratic state had compounded the deep sense of collective alienation and political apathy.

This Polanyian analysis lives on in Miliband’s ‘One Nation’ Labourism. The party’s strategy – led by Blue Labourite Jon Cruddas – is to present itself as the true representative of a unified British ‘social’ interest. One Nation sets-out to reinvigorate the social in Labour’s crumbling social democracy.

Going back to Polanyi’s text The Great Transformation we can see why this account appeals to Miliband. But the text also reveals a tension within Labour’s new ideological course; challenging the dominance of market power will require political confrontations that may well undermine the potential for a broad-based ‘One Nation’ consensus. In this sense, the means may jeopardize the ends for Labour’s ‘One Nation’ project.

Polanyi was by today’s standards a heretic. Writing in the mid-twentieth century, he provided a historical sociology of the breakdown of the laissez-faire market system, and argued that unlimited free markets could generate neither long-term prosperity nor social well-being. Rather, the capitalist economy necessarily sought to make commodities out of things that could not be commodified – in particular land and labour.

These ‘fictitious commodities’ revealed a tension in modern societies. As cycles of ‘boom and bust’ subjected host populations to cyclical deflation and unemployment, the social need to mediate the market would become increasingly intense.

In Polanyi’s terms, markets are always ‘embedded’ in social institutions. Creativity, cooperation, consent and reciprocity all function as human preconditions of the modern capitalist system. Polanyi argued that as free markets progressively eroded this social sphere, a ‘double movement’ would form in response. Society would fight back against the abstract principle – and the concrete manifestation – of market domination.

After the collapse of neoliberal finance and the growth model that went with it, Miliband’s project is to build a double movement for the 21st Century.

Labour’s key policy paradigms reflect this. Miliband’s early distinction between ‘predator’ and ‘productive’ capital emphasises – against the Blairite nostrum – that all business is not necessarily ‘good’ for the economy. Destabilising speculation erodes social unity and creates uncertainty. This chimes with the popular backlash against bankers and emphasizes the role of a ‘socially responsible’ business class. Labour’s concepts of the ‘squeezed middle’ and ‘pre-distribution’ are rooted in a similar Polanyian logic.

The primary attraction of this approach for Labour is that it fuses a post-class discourse with a critique of the market. This has the potential to mobilize a broad coalition of social interests and could provide an electoral pathway to the ‘squeezed middle’ and floating voters in marginal constituencies.

But there is a danger that One Nation Labourism fails to understand the realities of institutional power in Britain. Labour’s capacity to build a double movement rests on its ability to recognise this.

Paradoxically, the strength of Miliband’s Polanyian approach is also its greatest weakness. ‘One Nation’ Labourism abstractly asserts the priority of ‘the social’ over the economic. But imagery of ‘togetherness’, ‘mutualism’ and ‘cooperation’ stands in stark tension with the realities of power and privilege in modern Britain.

Massive tax loopholes have made Britain attractive to vulture capital and negligent business interests.  These constituencies would have to be tackled in a One Nation economy. Similarly, Britain remains one of the most unequal societies in the OECD. It’s regionally divided, with the ostentatious wealth and power concentrated in the South standing in contrast to a neglected and depressed periphery.

How would Labour address these difficulties through the One Nation approach?

Redistribution and progressive taxation require a political project that will rub up against entrenched power interests. A soft appeal to national ‘togetherness’ in the warm after-glow of the Olympics won’t cut it. Labour’s ‘One Nation’ strategy will need political courage and a proactive state to tackle systemic inequality.