On Blair’s musings...

I tried to avoid Blair’s broadcast and print interviews yesterday. Tried but failed. This caught my eye while perusing Tom Powdrill’s excellent Labour and Capital blog:

World Exclusive Tony Blair interview the Guardian: "I think the single biggest danger with the financial crisis was a view that gripped a lot of progressive politicians that somehow people were going to want the state to come back in fashion," he says in his interview. "I didn't think that and don't think that. I personally think – and that's why I am still an advocate of third way politics – that there is a concept of the state that is strategic and empowering that is actually the right idea.

"I'm not in favour of the big state and not in favour of the minimal state. I think there is a concept of a reformed and reinvented government that is where myself and Bill Clinton were in the early 21st century that I still think is the right idea.

"Let me ask this question: look round the world today and how many progressive parties are succeeding at the moment? I mean in Europe or what's just happened in Australia it's a challenge, and it's a challenge partly because the progressive forces in politics are in danger of misreading the financial crisis as meaning people want the state back.

"They don't. They are perfectly capable of distinguishing between the state coming in to stabilise the situation and the state coming in and acting as a principal actor in the economy. And in my view they won't vote for that."

Coherent political economy it certainly isn’t and perhaps not for the first time, Blair sets out a false choice: on this occasion it is between ‘the big state’ and ‘the minimal state’. But let’s set that aside for now. More worrying is his apparent inability or unwillingness to grasp that he and Clinton, through their muddled third way thinking, bear a direct and huge responsibility for laying the grounds for the financial crisis. Remember Clinton’s abolition of Glass-Steagall and the Blair Government’s Financial Services and Markets Act of 2001 (which hamstrung the Financial Services Authority)?

I think his language gives the game away when he argues that people ‘...are perfectly capable of distinguishing between the state coming in to stabilise the situation and the state coming in and acting as a principal actor in the economy’. The state is a principal actor in the economy of every developed nation. Rest assured that any nation in which the state does not merit this description will be among the poorest on the planet. If the state was not a principal economic actor it would be unable to ‘stabilise the situation’.

Of course the state’s role in the economy had been systematically undermined by ‘third way-ers’ Clinton and Blair. In thrall to deregulated financial capitalism, they completely failed to see that where markets work best, they work because they are controlled to a greater or lesser extent by the state. If Blair had accepted that the state must be a principal actor, and that its role can be positive, then the deregulatory frenzy that led to the crisis could have been avoided. And maybe he would have accepted at an earlier stage what his buddy Peter Mandelson eventually came to realise: industrial policy is important and legitimate.

I also can’t accept his political point. Surely right-wing parties are succeeding because their simple narrative - tough times call for tough measures - resonates with people? Unfortunately Keynesian policies (which, with unemployment high, a proximate risk of deflation and interest rates at the zero bound are essential) are counter-intuitive for the majority of voters. And in any case there are few progressive politicians with the confidence to promote them. On this I’m sure Tony is quite content.

Stephen Boyd - STUC