• The profundity of defeat

    SPD2Paper delivered to SPD event at the Friedrich Ebert Stiftung in Berlin, 30 October 2013

    I would like to thank Ernst and Anna and the Friedrich Ebert Stiftung for the invitation to speak today.  I am honoured by it and it is very meaningful for me.

    I will be talking about the need to renew our approach to organising, ideology and leadership in the wake of the defeat of both our parties at the last elections.  I will be suggesting that a new period of radical revisionism is required and that our shared traditions are the best place to look for our resources of renewal.

    I work from within the Labour Tradition in Britain which has always seen the German SPD as our most important sister party and which drew upon Eduard Bernstein and other German theorists as an inspiration.  It is important, however, to recognise the differences before moving on to what we share.

    The Labour Movement in Britain was not a secular organisation but itself the conscious hub of a common good initially brokered by Catholic and Protestant workers in the Dockers Strike of 1889.  There was no serious Catholic or Christian organisation of workers within Britain, that went on within the unions and the party itself.  This meant that the Labour Movement in Britain had no Marxist inheritance to renounce and at least until 1945 was less explicitly progressive than the SPD.  It also meant that there was not an organisational division between social and Christian trade unions.

    This relates to the second important difference which is that the Labour Movement in Britain defeated Fascism at home and then abroad, our most sublime achievement being precisely the work in the British occupied zone of North Rhine Westphalia that led to the establishment of Mitbestimmung within corporate governance in the Iron and Coal Industries, a vocational labour market model in relation to Handwerk and the banking system based upon regional and sectoral endowment.  These were extended nationally over the following three decades to form an institutional system of economic governance that was distinctive.  The Americans asserted their primacy through their role in the Constitution but the political economy was brokered by the British under the leadership of Ernest Bevin, the Labour Foreign Minister and founder of the Transport and General Workers Union.

    By 1945, my tradition was entirely defeated at home in that we adopted nationalisation and not co-determination, centralisation and not federalism, collectivism not solidarity.  We inherited a war economy and continued with it.  The work done, however, in the British occupied zone is the greatest example of Labour Statecraft in action, renewing and democratising ancient institutions, reconciling estranged interests, nurturing labour power and its representation in the governance of industry and upholding liberty at the level of the state and democracy within the economy.  It was a system that constrained the commodifying power of capital and the domination of the State.  It could be argued that it is better than what preceded it and better than existing alternative models.  From a revisionist perspective, that is quite a good start.

    The defeat of Fascism, and the election of a majority Labour Government in 1945 was only possible because Labour had strong mainstream support among working class voters and organised labour.  There was no serious Communist Party in Britain, and no serious fascist party either and the principle reason for this is that both were consistently defeated by Labour who maintained working class loyalty precisely because it was not an ideal or a set of principles, but an organisation that upheld the dignity of work and of working people and insisted that they had a constructive role to play in the governance of the country.  Labour did not flirt with the popular front or the unity of progressive forces.  It pursued a common good which included labour as an interest and as a source of value.

    In Britain, dispossessed and exploited people built a better life through the labour movement by building mutual institutions in housing, pensions, burial and assistance in distress.  They built relationships and institutions that were based on reciprocity and responsibility.  The Movement was thick with meaning, ethical categories were used to describe economic practices as they sought to retrieve a human status from the demands of a free market and a poor law state.  The Labour movement was built by the working class and it improved the conditions of the working class precisely because it was not simply left wing, it was also patriotic, conservative in relation to the constitution of Parliament and the monarchy, very strong in support of family life and contribution with a strong sense of place.  Municipal socialism was where we started.  Labour refused to be defined as an alien nation within the body politic and organised its power so that it could not be ignored.  Labour was not sealed off from the political language and institutions of Britain but generated an original narrative from shared inherited resources and reshaped them in important ways.  It offered the hope of a better life and a better country by increasing democratic participation in power and decision making.  But we lost it, we learnt the wrong lessons from victory and we handed over all power to the state in 1945.

    Labour in Britain is learning the profundity of defeat.  A great hope has died.  The ideal of a perfectly just state administered system that eliminated need and increased equality.  Post-war Labour ideology in Britain has reached the end of the road.  We tried the state (1945), we tried the market (1997), then we tried them both together (2007) and Britain is still not generating value in anything other than financial services and high end university teaching and research.  Paradoxically, both sectors are protected by the two most ancient, and most democratic self-governing institutions left in the country.  Cambridge University on the one side and the City of London Corporation on the other.  It is time for our socialist tradition to rediscover the social.

    Germany took a different path.

    It is of crucial importance in understanding Blue Labour that we claim the post-war West-German economic system as part of our inheritance, of what could have been in Britain if we had not learnt the wrong lessons from our victory which was based upon a war economy, planning and centralisation.  We claim it, first, as a form of statecraft in foreign affairs, or in our own language a model of internationalism in which civic peace, solidarity and free and democratic trade unions with real labour power in economic governance were given a central role.  It has certainly not been improved upon as a model of development from dictatorship to democracy or of economic growth.

    We also claim it in terms of the expression of an exiled tradition within our own party and movement, in which decentralisation, the preservation of skill and status and different forms of democratic governance within the economy were all subordinated to nationalisation, collectivism and administrative methods in which procedural justice subordinated all forms of particularity and associative power.  Politics ceased being about the negotiation between interests but about the passing of laws.  To acquaint you with Blue Labour political language, after 1945 England suffered a severe home defeat but a surprising away win in the form of the enduring power of the German economy and I am pleased to say that we are through to the next round on the away goals rule.  In the debate in Britain, Blue Labour was immediately accused, as socialist thought has been since 1848, by liberals and Marxists alike of being nostalgic, pre-modern and irrelevant.  The German economy saved our credibility.

    I will suggest towards the end of the paper that a different narrative is required if the SPD is to renew itself as a vital and virtuous force in European Politics, one that praises and seeks to export the German model based upon worker representation in corporate governance, vocational regulation of labour market entry, regional constraints on banks and the co-determination of pension funds which could provide an effective means of renewing trade unions, civic virtue and re-establish meaning to the term ‘social-democracy’.  When Bernstein said that ‘the movement is everything, the ends are nothing’ he was really on to something.

    The suggestion of this paper is that there is real common work to do on reworking a narrative, strategy and identity for our parties and that can only be done from within our traditions by retrieving neglected practices and perspectives (exiled traditions) which will enable us to function more effectively in contemporary conditions and enable us to talk more straightforwardly to our voters.

    One of the assumptions, that needs to be made explicit in this conversation, is that it is not a question of whether Germany is, or is not, the hegemonic force in Europe.  The question is: what kind of hegemon is Germany to become?  The role of your party and Labour Movement in shaping the institutional form of a European common life, in moving the contest away from free movement towards shared beneficial constraints, is an important one.  This is essential to our interests as well as yours.  Another way of putting this is that we must move away from an exclusive concern with external goals and aims and re-acquaint ourselves with two neglected aspects of our tradition.  The first is to remember that capitalism is characterised by a tendency to turn human beings and nature onto commodities and centralise ownership and that this can lead to authoritarian statism.  A social democracy is one characterised by democratic systems of governance within the institutions of society and the economy.  We need to strengthen the body politic and not exclusively the administrative mind.

    The second retrieval is of a politics of the common good which is based upon the reconciliation of estranged interests; capital and labour, immigrant and local, secular and religious, north and south, east and west on the basis of democratic association and institutions that promote a non-pecuniary value within the economy.  It is a politics that is social and democratic.

    The argument I will make is simple.  The vitality, popularity and power of the SPD is a necessary condition of a better European system based upon a balance of power in public and private corporations in which Labour plays a constitutive role.  This is not, therefore, a good time for Europe.  You are not powerful or popular enough to be the good that you need to be.  A blunt way of putting it is that the SPD is neither internationalist enough in shaping a social-democratic vision of Europe based upon the balance of power in self-governing societal institutions nor patriotic enough to lead your nation to the ends of democracy, civility and liberty.   This is a time characterised not by contradiction but by paradox.  One of these is that there is no effective internationalism without patriotism.  Another is that in order to achieve a more democratic society it is necessary to have effective leadership.

    The problem is deeply rooted.

    I am honoured to be speaking in the Friedrich Ebert Stiftung for Friedrich Ebert was in a very difficult spot in 1919 and upheld the rule of law and parliamentary government as any good Social Democrat should.  In recognising the chimera of progressive unity and calling the Communist Party for what they were, the tyrannical agent of a foreign power, he unfortunately made an alliance with the Freikorps and a coalition of forces who would never accept the democratic governance of industry and the recognition of labour and labour value.  It was a tragic choice because it did not need to be made.  In conceptualising the conflict between the National Assembly here in Berlin and the worker and soldiers committees that grew in the factories and demanded the end of the military management of the economy as a conflict over sovereignty he demonstrated the weakness of an assimilation of the socialist tradition to the liberal conception of unmediated sovereignty in which the individual and the collective are the only two meaningful units of political agency.  It was possible to have a rights based state and a democratically negotiated economy, as the post-war settlement has indicated.  That distinction was not a meaningful one to Freidrich Ebert in 1919. It did not stop, however, a particular development within Social Democratic thought in Germany that was not exclusively Statist in form and which stressed the status of skilled work, forms of partnership and democratic governance and a greater power for the workforce within the economy.  An idea of a civil economy was developed.  Internal as well as external goods characterised your tradition, in which virtue took its place alongside rights.

    One of the major works of the inter-war years was Franz Naphtalie’s, Wirtschaftdemokratie, Ihr Wesen, Weg and Ziel, which was published in Berlin in 1928 which is the clearest articulation of a decentralised economic system based upon interest representation which were in turn organised within sectors and in which organised labour played a constitutive role.  It was presented as a modernisation strategy which would improve efficiency and skills within a framework of national industrial development; it was also a very good way of knitting the Unions and the Party together for mutual advantage.  It was a remarkable achievement, particularly at a time when modernity, and socialist modernity in particular, was conceived in geometric form with scale and centralisation the dominant trend.  It was adopted as Party policy but that didn’t amount to very much at the time.  Naphtali survived the war and ended his career working for the Histadrut, the Israeli Trade Unions, but his legacy, I would argue, is a very important one for German Social Democrats as it provided a non-Keynesian, decentralised, democratic conception of economic governance which embedded the price system and a negotiated partnership between capital, labour and the state within the economy.  It corrected weaknesses with the works council system established during the Weimar Republic by strengthening labour representation in terms of a three level negotiation namely collective bargaining, co-determination and works councils.  It upheld liberty of conscience, religion and association in politics, and a robust democracy within the economy.

    The credit for the Social Market has for far too long been taken exclusively by Ordo-Liberals such as Ropke and by Catholic Social Thought and its magnificent theoretical connection between subsidiarity, labour value and the balance of interests.  The contribution of both should be acknowledged.  What is more neglected is the constitutive theoretical and institutional role played by the Labour tradition in Germany, unions as well as party, in developing the inheritance out of which such a distinctive arrangement could be negotiated.  It was a settlement brokered by the Church and Labour which involved a settlement between capital and labour and the fundamental agreement concerned the human status of labour, the importance of their self-organised representation in the governance of firms and labour markets.  This was an extraordinary achievement by the Party and the Unions but I rarely hear it claimed.

    It was a settlement between a range of political and economic actors that could only be achieved due to the profundity of defeat.  The defeat of the Nazis was not simply military but ideological.  What was defeated?  In terms of the new political consensus that emerged there was a profound shift from military to civil ends.  There was a rejection of unaccountable leadership and a proper system for the decartelisation and decentralisation of power.  There was a replacement of the fuhrerprinzip by a balance of power and a strong stress on the specificity of place and region as well as the establishment of democratic self-government for those places.  It was not a revolution.  Such a thing is impossible and can never account for the necessary continuation of things and people through time.  It was, however, a great transformation in the governance of societal institutions.  I mention this because I have read some social democratic work which stresses the continuities and it is worth emphasising the rupture.

    It is customary among political elites of all traditions to unwittingly become trapped by Lenin’s question of ‘What is to be done?’  It is far more important, at this moment to ask Marvin Gaye’s question of ‘What’s Going On?’ And what is going on is that the SPD has lost the trust of working class German voters, is overwhelmingly a party of the public sector, social science graduates and ethnic minorities and won barely more than a quarter of the vote.  It has moved its concerns from those of the internal governance of the political economy to a political and legal orientation that requires the passing of laws, external regulation and redistribution.  It has not seriously defended the internal virtues of its economic system, preferring to stress external factors such a stimulus and taxation.  Justice and rights rather than democracy and the good have come to define the position.  I am strongly suggesting the party has become liberal rather than socialist and that is the fundamental problem.

    Nowhere is the empty space where the SPD should be more noticeable than in the shaping of Europe.  Unless there is a decisive change of approach the very institutions of economic governance in Germany could become illegal according to competition and free movement laws.  Germany has exported its goods to Europe but it has not exported the good of its system.  There is no question that the German economy generates value and that it is the dominant force in the economic sphere.  That is what I meant earlier when I said that the question of not whether Germany is or is not a hegemon but tried to draw attention to the kind of hegemon that it is.  It cannot be compatible with our shared Labour tradition that Germany has a unique and distinct system that is not part of the European system.  The rest of Europe is institutionally depleted, it lacks virtue and vocation and does not have the institutions to generate value yet the entire debate is about money.  Bailouts, solidarity loans, stimulus and other forms of state spending within a system where sectoral and regional banks have been decimated by financial centralisation, Trade Unions have become marginal and lack a constructive role, cities are bankrupt, regions dependent and universities degraded.  The SPD should not be only talking about a redistribution of money but a redistribution of power in which capital is constrained by robust local and sectoral organisations and where democratic self-governing institutions play a fundamental role.

    As a member of the House of Lords I put an amendment down two weeks ago calling for the regionalisation of the Royal Bank of Scotland which was nationalised during the crash in 2008 and now being returned to market.  It used to be a trusted local financial institution but in order to maximise its returns it became a normal bank and lost its assets.  I was regaled by Peers telling me about the failure of the Landes Banks without mentioning that the same thing had happened to them with the loosening of constraints and they too had become profit maximising.  This is another area where our Parties could make common arguments concerning the greater resilience of banks working within a system of beneficial constraints.  The economic rationality of social democracy should be affirmed in that constraints on capital protect the asset.

    Watching from afar, as a friendly observer, it is hard to discern what the SPD strategy is in the negotiations.  The demand for a strong minimum wage, which we would call a Living Wage, is excellent but the list of demands does not cohere into a strengthening of labour value, a constructive alternative to an abstract and generalised form of the EU or to a renewal of the consensus in which the SPD and trade unions will play a vital and growing role.  The success of the post-war settlement was built upon relational accountability not a universal regulatory system, on the formation and reproduction of vocational skills, not a stimulus package, on the establishment of regionally constrained capital not the bailing out of failed homogeneous banks.  The key strategic posts should be the foreign ministry and economic portfolios so that solidarity, subsidiarity and status can be pursued in the national and international arenas which promote practices that strengthen a social democracy.  The vision needs to be mundane and concentrate on the daily lives and needs of people to earn and belong in their society.

    One of the great strengths of Blue Labour is that we are, by our nature, blue.  We live with tragedy, defeat and  loss.  It is what we expect, even when things are going well.  We are not looking for happiness, or tranquillity, but find meaning in trying to be good.  That goodness is found in building relationships, and unlikely friendships that can resist the domination of capital and the state, the domination of the uneducated by the educated, the poor by the rich.  We are anti-revolutionary revisionists, we are true to Bernstein and Naphtali.  It goes without saying that we admire Helmut Schmidt.  We are constitutively part of European Socialist history and your defeat is ours too.  It is fundamental to our approach that defeat needs to evaluated and discussed honestly.  Otherwise we learn nothing from the experience.

    When Labour lost in 2010 it was our second worst defeat since women got the vote in 1921.  Labour had also lost the trust of working people, the art of politics, the ability to reconcile estranged interests and redistribute power to people.  We had become progressive and hostile to the concerns of our voters.  In talking in this way we were considered disloyal by many within the party while we thought we were being faithful to our party and its traditions.

    We analysed three areas that needed fundamental change.

    The first is the recovery of a tradition of labour organising that is rooted in the politics of the Common Good.  Ed Miliband, our party leader, invited Arnie Graf from the Industrial Areas Foundation (IAF) in Chicago, the organisation founded by Saul Alinsky, to Britain to direct Labour Organising in the Party.  There is a very strong emphasis on leadership development from within working class and immigrant communities who vote for us, local campaigns that attract new members to the Party and public assemblies where local manifestos are agreed.  This has only been in place for just over two years but there is a clear increase in party membership in those areas where it has been tested and a strong improvement in candidates from non-professional backgrounds coming forward for selection.  The change from a transactional culture to a relational one has been championed by the General Secretary Ian McNichol.  In Lancashire in the County Council elections where the local party wrote its own manifesto and ran an exclusively local state of candidates built around town hall assemblies and testimony from Party members the vote was doubled from four years ago.  ‘The Movement is Everything’ is now firmly established among regional organisers and constituency parties as their credo.  There is an extensive programme of leadership training, based upon the IAF method for Parliamentary candidates and party members.  It is developing into a very different kind of ground game in which local leaders and organisations galvanise the vote.

    The second fundamental change is ideological.  Jon Cruddas, the MP in charge of the Policy Review has articulated this re-orientation most effectively in his speeches ‘The Condition of Britain’, ‘Earning and Belonging’ and ‘The New Statecraft’.  All are available on the internet.  This involves a central concern with family, place and work as the key themes of policy organisation and the renewal of old institutions relating to vocation and of civic politics.  This has been organised around the idea of One Nation, itself borrowed from Benjamin Disraeli the Tory Prime Minister.  By listening to people, by building relationships the position is not articulated in terms of first principles and guiding philosophy but through concentrating on reversing a sense of powerlessness and national decline through common action.  This links directly with the renewal of Labour language in how it describes governance.  In the economy the One Nation policy review talk of virtue vocation and value.  In welfare, responsibility, resilience and relationships.

    Blue Labour argues that New Labour and the Third Way were naïve in their understanding of finance capital and immigration and forgetful in its approach to labour value.  The Hartz reforms here did not seem to grasp the paradox that through the preservation of status within the economy efficiency and productivity increase.  I think they were based upon New Labour assumptions concerning flexibility and innovation that turned out to be false and were brutally exposed in the financial crash of 2008.

    The final change relates to leadership acting as a generator of change.  There is the need for a consensus change across Europe that puts a greater stress on labour value, democratic participation and the common good.  By actively promoting the Labour Party as the only organisation that can bring immigrants and locals together, that can negotiate with powerful private corporations through political campaigning Ed Miliband gives practical meaning to the idea of One Nation.  He is seeking to resist the domination of unaccountable elites through embedding the political position in the organising. He has done this with the energy companies and the Murdoch and Rothermere Press.  He has also confronted the Trade Unions in their unaccountable power and the party reforms will indicate the position to the country.  The definition of a good leader is that she has followers.  There is an active attempt to generate a following for Ed Miliband in the changes he is leading in the Party and wishes to do in the country.  He, in turn, generates a following in the country around accountability, the redistribution of power and solidarity.  The goal is a consensus change away from Thatcher and New Labour and towards a Social Democracy built around the common good.

    There is more to be said but I will leave it there.  Blue Labour took a view that the defeat on 2010 required a new period of revisionism that challenged the prevailing orthodoxies, particularly the uncritical assimilation of liberalism as an economic and political philosophy.  It also required a retrieval of neglected or abandoned internal traditions that could enable us to innovate in policy so that we can redistribute power and challenge the domination of finance capital and other unaccountable elites.  The destiny of social democracy is to resist domination through the building up of associations that strengthen the social, that democratise those institutions and hold market and state elites to account.  Our shared inheritance and tradition makes such a joint venture a potentially beneficial one.

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