Key note speech to the Australian Society for the Study of Labour History,13th Biennial National Labour History Conference, 11 July 2013
I would like to thank Nick Dyrenfurth and the Australian Society for the Study of Labour History for the invitation to speak here. I am happy as well as honoured to be with you for a range of reasons; political, personal and professional. Coming to Australia is for me, one of those things that could be summarised under the heading of a dream come true. For reasons that I am sure you will tell me are entirely wrong, I thought of Australia as country where workers could be free and speak their mind without the discombobulating sneeriness of the English ruling class, of whatever politics to stop them speaking their minds. It says something that I felt I had to come to the other side of the world to speak mine and your hospitality is greatly appreciated.
I am, also, by training and vocation, a historian.
I studied History, after a fashion, 30 years ago, at Cambridge University, which gave me my first insight into the power of institutions. My particular interest, at that time, was 17th century London and most specifically the clash between the financial and the vocational guilds within the Corporation of London, and the conflict between apprentices and masters. I mention this to share the information that my understanding of Labour history was skewed from the start towards the language of the Ancient Constitution and the Free Born English, the Commonwealth and resistance to tyranny. There is a long standing concern with the City of London as a political as well as an economic institution, with the subordination of the substantive to the formal economy, of the domination of finance over all other type of economic activity. The City of London Corporation, established in 1191 is a commune, a self-governing city with a status from time immemorial as preceding Parliament remains outside Parliamentary Sovereignty when it comes to ordering its own affairs and remains a crucial political actor as well as an economic force. It was also foundation in founding the City of Sidney Corporation and they share a voting system. This shaped my view as concerns the durable power of institutions in the shaping of developmental pathways. Its assets remain undisclosed for as an Ancient City that has never been in debt it does not have to disclose them. That is an important part of the narrative in terms of the role of finance in the formation of the British State and what is required to constrain and domesticate its volatile and avaricious tendencies. As a historian you could place me as an institutionalist.
In Parliament we are instructed to always declare our interests, financial or organisational when we speak in a debate. This is the academic form of that. My early academic formation of reading about the abolition of the usury laws, the de-legalisation and then criminalisation of vocational association, the assertion of freehold ownership over customary practice and the domination of the Treasury and the Navy in the development of the British State had a profound effect and shaped my subsequent range of philosophical and political interests because that is what happened next, academically speaking. I did my Masters in philosophy at the University of York, not because I was any less interested in history but because there was very little possibility of discussing ethics in history and that involved taking sides and imagining what might have been. I had to renounce my dream of being a professional historian precisely because I could not stop taking it all so personally. The Dockers Strike, the Enclosures, the Putney Debates, all of these had tremendous ethical and political force for me, I couldn’t help taking sides.
I had to embrace the paradoxical status of the ‘vocational amateur’ when it came to history. I thought that the political narrative that I was interrogating was much too general, selective, partisan and moralised to ever be acceptable to professional history and yet it was equally true that such a narrative was necessary to open up a new political space and that such a narrative had claims to truth and credibility. As a vocational amateur I felt comfortable with phrases such as ‘honouring the dead’ and ‘taking inspiration from their failure’ but as a professional historian I don’t think I would. It was the philosophical period that led me to the concept of a ‘rational tradition’ developed by Alasdair MacIntyre and most particularly his essay, ‘epistemological crisis, dramatic narrative and the history of science’. In this he argues that the problem with the discussion of the history of Science relating to paradigm shifts generated by Thomas Kuhn’s the ‘Structure of Scientific Revolutions’ is that they turned on an inexplicable eureka moment, a gestalt switch, likened to those pictures of a duck which is also a rabbit and is evoked in teaching and learning visual aids by the image of the light bulb. MacIntyre argues in contrast that any significant change in scientific understanding is based upon a narrative of why the old system could not explain date coherently and why the new paradigm can explain the failures of the old one better. What Kuhn called an epistemological crises, which is part of the breakdown of the old and the emergence of the new, is a crisis of explanation, particularly of what is going wrong. This can afflict a political tradition as much as a person. Alasdair MacIntyre writes that:
When an epistemological crisis is resolved, it is by the construction of a new narrative that enables the agent to understand both how he or she could intelligibly have held his or her original beliefs and how he or she could have been so drastically misled by them. 
This is the point about my critique of 1945. It is not that following a depression and two world wars that it was not necessary to build a welfare system and ensure workers rights. There were good reasons, following the war, to believe that central planning was the most rational way to do it and that scientific management was the most efficient form of administration.
The problem is, for British Labour, the Attlee government remains the Platonic form of what all Labour governments should aspire towards. Elected with a landslide majority in 1945 it enacted a series of laws that transformed the lives of British workers and established Labour as a party of government. It nationalised coal, rail, water, electricity and gas. It created a National Health Service and executed the Beveridge Report which established unemployment benefit. Keynesian economic thought ruled supreme. It didn’t stop there. The Labour Government passed the Town and Country Planning Act which protected the Green Belt around London and other major cities as well as the National Trust. In terms of foreign policy, Labour was an active founder of the United Nations, NATO, the World Bank and the IMF and effectively helped establish the post-war settlement in the international sphere. These were definitely noble measures so why does Blue Labour refuse to acknowledge its virtue and abiding achievements and further argue that it laid the groundwork for our decline as a movement and as a party? To some it seems that Blue Labour is arrogant and ungrateful. Others like to think that we are not really part of the Labour Tradition at all. As a public argument, it baffles the British people, who don’t give much thought to 1945 and it infuriates the party. Why decline the kind invitation from sympathisers to repent and move on?
The reason is that the Attlee Government has all the faults of Platonic philosophy and blocks the renewal of labour intellectually, organisationally and politically. Without a shared understanding of the faults of 1945, British Labour will continue its pathway of being the party of the public sector, professionals and ethnic minorities and cease to be a presence in the life of the working class and the political organisation they created. It will not be a party of the common good but of estranged sectional interests in coalition. The party will become increasingly rationalist, technocratic and progressive and have no vision of what a better society could look like.
So, what’s the problem?
The first point is that 1945 naturally emerged from the war economy and it continued with its dominant features. It was centrally planned and this led to problems concerning pricing, innovation and efficiency that barely need rehearsal but do need re-stating. Labour was good at beating fascism, at home and abroad, but did not prove so adept at civic peace and prosperity.
Following from this the model of nationalisation pursued was entirely managerial and unilateral. There was no worker representation on the boards of nationalised industries which were to be ruled (ideally) by PPE graduates from Oxford who were answerable only to the Secretary of State. This is in contrast to Germany where elected representatives of the workforce constituted at least a third of the members of supervisory boards of large companies as well as working through a system of works councils. The British model of nationalisation reproduced the pre-existing inequalities of power and responsibility within industry leaving the trade unions marginal, inferior and in a real sense infantilised in that ‘free collective bargaining’ did not require any consideration of the long term strategy of the sector or business. There was no constructive role for labour within the organisation and this was ruinous on two levels. The first was the lack of any effective feedback mechanism within nationalised industries as to the reality of conditions and production beyond statistics and management themselves. The structure mitigated against problem solving. The second was that Labour, as an organised factor of production, was in a subordinate condition and dependent on the state for continued political support for the model. This meant that there was a form of defensive stagnation of a Brezhnevite variety that characterised Labour’s economic thought for a long time after 1945 and it could never find a secure resting point between nationalisation and privatisation, domination or surrender. The trade unions became committed to state spending and nationalisation as a political position that was based upon egalitarian principles so that their irrelevance and marginalisation seemed a small price to pay. The meaning of proletarian is based on that class in Rome that were raised solely in order to sacrifice themselves for the Republic, or the Empire. They had no status, no assets, no place in the world other than to fight and die. You could say that nationalisation intensified the proletarianisation of the working class and that the labour movement thought this was a good thing. But it was not..
Until the mid thirties, by contrast, Labour’s economic thought was municipal, pluralist and creative. There were plans for a mutualised canal system, a worker-run railway system, a balance of interest in the locally-owned mines between capital, labour and locality. Sheffield developed ideas for a ‘self-governing republic’ in which citizens, workers and management would run the City’s steel industry on the basis of their expertise and mutual interest. Keynesianism was a disaster for Labour because it put the emphasis on money rather than power, and most particularly the balance of power. It sanctified an external system of macro economics with no emphasis on specialism, firm, region or place. Nationalisation maintained the proletarianisation of labour (no ownership, no assets, no status and no place), the domination of management and the superior rationality of centralised calculation to economic growth. All are wrong.
The roots of this are to be found in the socialist calculation debate in the 1920s in Vienna, an obscure but pivotal debate that people don’t really talk about anymore. On one side there was a group of socialist thinkers who thought it was possible to calculate future needs and demands. The dream was that you could build a big enough computer, input all the relevant data, and plan rationally for future needs and wants. This was the basis of a planned socialist economic system. On the other side was a group of economists around Ludwig Von Mises, to whom Popper and Hayek became increasingly attracted, who argued such a thing was impossible. It was impossible because the decentralized process of the price system relied on a huge amount of information that was not calculable or knowable; price setting was a subjective process that gave a signal about what people wanted and this was essentially unpredictable and unknowable. I’m from that dissident socialist tradition that thinks that Hayek and Von Mises won that argument, as well as thinking that Hayek, although deeply flawed for reasons I will explain, also won the argument with Keynes after 1945. This critique of state planning, of socialist calculation, in many ways set the terms of debate for the next 80 years and we are still there now. The Blue Labour theory of history asserts the importance of civic institutions, of labour value and vocational organisation in underpinning innovation and growth, of tradition as a core feature of modernity. As such it is a critique of both Keynes and Hayek and it is important to grasp the ways in which Hayek was right to appreciate the extent to which he was wrong.
In his sociological, anthropological and historical work Hayek works with three concepts. He works with instinct on the one side, reason on the other and then tradition as a mediating principle. In other words, Hayek says that an Open society, a catalaxy is grounded in certain traditions of thought that preserve ethics, honesty, law abidingness, traditions of trust, skill and honesty that are not reducible to either instinct or reason. He considers instinct alone a terrible threat as it is essentially communitarian and atavistic. He considers rationality alone as a terrible threat as it is instrumentalising and self-defeating. Tradition plays a mediating role between instinct and reason.
What Hayek did not do was develop a mediating concept in his economic thought. So there was a choice presented between state and market, catalaxy or teleocracy, between an open and a closed society. There are multiple problems that stem from this. In Hayek’s economic thought the market takes the complete burden of the sphere of freedom. You then have no ability to conceptualise the institutions that are necessary for the functioning of effective markets. What are those nonmarket institutions that develop a non–pecuniary ethic and that underpin the development of sustainable, efficient price setting markets?
This is the importance of Karl Polanyi who rejected both statist and market orders and tried to conceptualise the decentralized institutions that could resist commodification and oppression. Citizenship, vocational institutions, Christianity and agricultural interests all formed local practices and institutions that embedded the economy in local institutions. There was an equilibrium between state, market and society.
In our time the German Social-Market economy exhibits a set of decentralized institutional arrangements that underpin reciprocity, relationships, trust and knowledge that are not captured by the state/ market distinction. Hayek perpetuated, along with Keynes and Marx, a duality between state and market that does not allow for the conceptualization of the institutions that underpin an open society. If you see the market as the sphere of freedom then the state is necessarily closed, authoritarian and a threat. The market, however, has been voided of all ethical or vocational considerations and there is, therefore, no institutional constraint on individual action outside an abstract general law. The state then becomes overburdened with morality and the state is called upon to do things in cannot do, and should not do. This was very pronounced under New Labour. Over the past decade the state was going to make the fat thin; teenagers chaste, bad people into good parents, to increase everyone’s capabilities. But this was an overburdening of the state, and once again a diminishment of the possibilities of society. The mediating institutions of society were ignored in the development of character, responsibility and vocation.
The distinctiveness of the Social-Market is that there are non-state decentralized institutions with effective power in the governance of the economy. I’ll just mention three very important ones with a hint at a fourth. The first is vocational training. People who work with their hands as well as their minds are given the same status as we have here for lawyers, accountants, dentists and the professions. Labour market entry is controlled by the completion of an apprenticeship that leads to mastery. Hayek has no mediating principle within the economy so there is no tradition of translating ,in terms people can understand, the vast flow of information that provides data, no common framework of judgment. What vocational training does is allow people to renew skills. So you have the paradox that institutions that were described by Gordon Brown in 1996 as Jurassic and pre modern, are the very basis of the efficiency and the very high value end of German industrial innovation. The preservation of patterns of trust, reciprocity and skill that are outside of market forces but function as a power within the market economy are an essential condition of an open society, of a good society and above all a society that actually has meaningful economic growth. The addition of tradition as a mediating principle between instinct and reason works well in the economy too.
Socialists lost the calculation debate in the 1930’s and it has been a long hard road to learning that lesson and locating the real weakness of a market economy which lie in commodification and centralisation with an inadequate understanding of the non-pecuniary institutions required to defend the non-commodity status of labour, land and knowledge. Another way of putting all this is that two significantly different approaches towards social ownership and national renewal were initiated in 1945 in Germany and Britain. Perhaps it was decisive that Germany lost and Britain won on the basis of a centralised state model but there has been nearly seventy years to make a judgement on the comparative strengths of the two systems and it does not look good for my team.
The second big problem is welfare, which effectively removed the organisations of labour from any role in the lives of the poor and their improvement, handing over all responsibility to the state. It undermined entirely the culture of the labour movement up until that point which had been based upon reciprocity, responsibility and local institutions. It intensified the trend which saw poverty not in terms of a lack of power, relationships and knowledge but simply in terms of monetary assets. Through its universal system it undermined contribution and withdrew from making judgements relating to desert. Need became the primary criteria and far from being viewed as a mutual and political achievement it became legalised and conceptualised in terms of right. Welfare denies agency and responsibility and there is simply nothing more important than the ability to meet your obligations to loved ones. Labour moved from an ethic of responsibility to a language of entitlement and this is ruinous for political action. Lawyers and public sector managers began to dominate the party leadership and its mode of thinking. As the failures of the nationalisation model became apparent labour withdrew from any internal power within the economy depending upon taxation and regulation. The state became the exclusive instrument of societal transformation. It was a mundane recipient of such an extravagant gift.
The third big problem was its view of Statecraft and its commitment to collectivism as an administrative form of government rather than institution building and leadership development from within the working class. That is a framework of democratic politics based upon participation in self-government by the people. This led to the priority of policy over politics, an inability to negotiate differences, with a sullen swing between acquiescence and militancy, compromise and militancy with no constructive alternative to propose beyond more of the same, which is money we haven’t got, an economic model that doesn’t work and a welfare system that demoralises the people we care about most. The legacy was a strategy that was either based upon being more technocratic, modernising and efficient than our capitalist rivals or to mine a reserve of resentment. It was not based on organising but mobilisation, on administration rather than participation, on entitlement rather than responsibility, on money rather than power, on policies rather than an institutional politics. It was not a good thing.
Fourth, was the philosophical framework itself. The problem with Plato and ideal forms, as Aristotle pointed out even before 1945, was that it had a tendency to emphasise collective unity over an integrated diversity and ended up with a political elite at odds with the prevailing political culture of the people. The philosopher Kings were rationalists who disliked the contingency of politics. In other words our adoption of Fabian rationalism as our ideology left us with contempt for the traditions and meanings of ordinary people, hostile to the common good that needs to be brokered between estranged interests and with a progressive universalism that found it hard to conceptualise the importance of the particular and the local.
Political renewal of the type and scale required by contemporary circumstances is always, in part, an act of retrieval. Exiled traditions, the losers in other words, need to be invited back in order to provide the unexpected nutrients that can enable a story to be told from within the tradition that can understood why people believed what they did in 1945, but also why we would be wrong to believe in them now and an ability to tell a story of what went wrong and how we can make things better. That cannot be done if we think that there is no problem with the assumptions or the model. We cannot understand our estrangement from the working class, our inability to challenge the power elites of capitalism and the state, our inability to innovate in manufacturing, technology or service without a recognition that there was something wrong with 1945.
Blue Labour is a constructive alternative to statist and market based forms of socialism. In contrast it tries to put the social back into socialism, and most particularly stresses the role of self-organised interests in political and economic organisation. It tells a story of a future that will be pieced together from discarded remnants of the Labour Tradition, giving far greater emphasis to the catholic inheritance in terms of Catholic Social Thought and disestablished Protestant free born English traditions. These were a constitutive feature of the rise of the Labour Movement and the common good brokered between Irish immigrant Catholics and local Protestants is an example of the kind of politics that is required in all our cities. In order to do that we need to find a common good around the political economy, the Living Wage, the interest rate cap, regional banks, vocational colleges, workers on boards. The dignity of Labour is shared between them and is the foundation of the common good that can be found between immigrants and locals, workers and bosses, religious and secular. This was the politics that built the Labour Movement up to 1945 but it was destroyed by 1945 and replaced by the public interest, a legal and not a political category. We need to go back before 1945 in order to find the resources through which we can craft a better future, defined in terms of democratic participation in self-governing civic institutions in politics and the economy. The German Social Democrat Eduard Bernstein famously said that the movement was everything and the ends were nothing. It is the best place to start this new period of revisionism.
 See Alasdair MacIntyre, “Epistemological Crisis, Dramatic Narrative and the Philosophy of Science,” The Monist 4 (1977). p. 455.