Ross McKibbin on the last days of Labour

To do something requires a proper understanding of what went wrong. Here, much of the media commentary has missed the point. It has been all too easy to blame the bankers; their behaviour makes it almost compulsory. It is also easy to blame the clever Oxbridge types who invented risk models and forms of securitisation neither they nor anyone else understood. But their role was always secondary. If you tell bankers to go ahead and make money that is what bankers will do. If the Labour Party says it is intensely relaxed about people getting filthy rich, people will get filthy rich, and if you announce that you will regulate their activities with a light touch they won’t care how they get rich. Adair Turner, in his defence of the Financial Services Authority, was perfectly right to say that had the FSA told any bank to give up its riskier practices the government would have been down on it like a ton of bricks. This says little for the FSA’s independence or its courage but, alas, it’s true.

Under New Labour departments of state are named not after their function but after their aspirations – the names, it seems, are designed to tell you what the government aspires to. Part of the department that was once ‘education’ is now ‘innovation, universities and skills’, in case we failed to understand that the government wishes to encourage skills and innovation. The department that used to be concerned with ‘trade and industry’ is now concerned with ‘business, enterprise and regulatory reform’, ‘regulatory reform’ meaning simply ‘removal of regulations’. The very name was both a signal to the City that the government wanted it to make a great deal of money, and an expression of the ideology that has prevailed in most English-speaking countries since the early 1980s: an ideology deeply hostile to the quasi-social democracy of the 1960s and 1970s, and one which regarded wide and increasing income inequality as essential to economic success. 

Knowing what to do now depends on the kind of economy and society we wish to re-create. That is the hard part and there is no evidence that Brown has given any real thought to it. All he seems to want is the status quo ante plus an FSA with more gumption.