Historically, deep economic crises have tended to manifest themselves in ideological and political disruptions and paradigm shifts.
The Great Depression ushered in the New Deal, fascism in Europe and later still, the post-war social democratic settlement. The profit squeeze and stagflation of the 1970s paved the way for the neoliberal economic revolution across much of the western world and beyond in the 1980s. In turn, the Washington consensus to which that gave birth met its first entrenched resistance in Asia and Latin America at the end of the 20th century, and began to unravel in its US and European heartlands after the global financial crisis struck in 2008.
But no breakthrough to a new ideological terrain has taken place in the advanced capitalist democracies. Democratic politics in the US have shifted a little towards a more populist liberalism, but the centre ground on the ideological spectrum of Washington politics is still to be found much further to the right that in the pre-Reagan era. Meanwhile, a battle for the soul of Europe is underway which has fractured and splintered existing political formations, rather than giving rise to decisive new political configurations.
As ever, the UK exhibits these ideological fissures in more muted, parochial forms. Here, the Labour party was too weak by the time of the last general election to place itself at the head of a coalition for post-crisis economic transformation and political renewal. For a fleeting moment in 2010, the prospect of a centre-right realignment of British politics looked possible, undergirded by a commitment to an economic austerity programme. But that possibility has now disappeared, dispatched by the Conservative party’s unwillingness to embrace democratic and constitutional reform as the price for a sustained period in power. Nick Clegg’s announcement yesterday that the Liberal Democrats would no longer support the redrawing of parliamentary boundaries writes the first bar of the Coalition’s requiem mass.
Much of the commentary on Clegg’s announcement has focused on what it means for the dynamics of the Coalition for the remainder of its term, and the respective leadership tests that he and David Cameron now face (or, as John Curtice has done for Juncture, on the thin lifeline now extended to the Lib Dems). Less energy has been expended on the ideological dimensions of the disintegration of the Coalition’s governing project.
There are at least two major issues here. First, it shows that the Conservative party has still not yet risen to the existential challenge of forging a coherent and broadly accepted post-Thatcherite direction. Cameron’s modernisation project has proved to be skin-deep. It hasn’t staked out new political territory or taken broad swathes of Conservative MPs, activists and opinion-formers with it, and its hegemonic potential has failed at the first hurdles of constitutional reform. But the exit route of a return to Thatcherism looks like a political dead-end, and is anyway closed off while the Conservative party remains in a coalition. The alternative of a ‘Blue Collar’ modernisation has superficial appeal, but it is largely polling-driven. It has some policy pegs on which to hang Conservative politics but little if anything yet to say about the institutions, alliances, discourses and commitments that might constitute a new Conservative transformation of Britain.
Second, for the Liberal Democrats, the experience of Coalition has proved the sagacity of Andrew Adonis’ warnings that a centre-right government would have no foundational unity on key political issues such as democratic renewal, public service reform and Britain’s role in Europe. The initial impetus to liberal politics that the Coalition secured came largely from a reaction to Labour’s late-stage statecraft: the removal of targets, ID cards and the rest of it. Once those policies had been delivered, and the austerity gamble had failed to deliver growth, the Liberal Democrat position in the Coalition was always likely to become more precarious (and that’s before you reckon NHS reform and tuition fees into the ledger). As Tom Clark pointed out this morning, no amount of genuflecting to the personal tax allowance threshold or pupil premium can mask that weakness.
The key question for the Liberal Democrats is now whether they have the foresight and ability to move decisively beyond their Orange Book phase, towards a more recognisably centre-left liberalism that is capable of speaking to the problems faced by modern Britain and of appealing to the Labour party in future coalition negotiations. Ideologically, that may owe more to Grimond that Lloyd George, and its core components are likely to be a post-deficit political economy that it can share with Labour, a robust localism, and a new approach to core public services like childcare. Whatever form it takes, however, now is the moment when the social liberals have to set the party’s agenda, rather than simply react to the leadership’s positions or act as their handmaidens on divisive Coalition policies.
For their part, Labour ranks are triumphalist today. But appearances are deceptive. Labour still has an electoral mountain to climb, despite the fact that it has been handed back an electoral advantage. It is still feeling its way to new ideological directions and its post-Blair/Brown identity. The temptation will be to pursue a safety-first, managerial strategy, and to make minimal policy commitments. On that basis, it could win in 2015 but still not know what to do with power – exactly the position that David Cameron now finds himself in. Ed Miliband wants to avoid that fate and has proved himself capable of thinking beyond the confines of day-to-day politics. He now needs to translate that foresight into a clear, strategic direction and a coherent programme for government.