Keir Starmer's Loyal Opposition

Coronavirus has meant that the already low level of public interest in the Labour leadership election has dwindled to nothing. Although I’ve been mostly ignoring the actually-existing election, I am finding ways during the lockdown to torture myself with an imagined alternative.

That imagined alternative should serve to demonstrate just how meek the actually-existing Labour left has been. Firstly, Jeremy Corbyn should have endorsed Rebecca Long-Bailey. She was always going to be styled as the Corbynite candidate, so why not embrace it? No, it’s not the done thing for existing or former leaders to endorse current candidates, but that never stopped Miliband, Brown or Blair from intervening against Corbyn. There should have been an opening rally (remember those?) in early January with RLB joined by McDonnell, Abbott, and Corbyn, along with leading figures in Unite, Momentum, and other unions and affiliated socialist societies that ultimately backed her. The reasons this didn’t happen are clear: McDonnell and Abbott backed RLB quietly, presumably because they didn’t want to tarnish her reputation as a unifier ahead of the campaign (fat lot of good that did). Corbyn stayed mostly neutral (a few nudging video appearances aside) presumably for similar, flawed reasons. RLB had to actively win over the support of Unite and Momentum, which might have both gone for softer left choices if there had been one. The early work RLB had to do reflected the lack of preparedness of the left for a leadership campaign. But how on earth could the Corbynites have been so negligent – so complacent – as to not anticipate a challenge from the right in the likely event that Labour eventually lost the 2019 election? How did they fail to coordinate their allies and game-plan a succession? I think this boils down to two things: firstly, some genuinely believed – after 2017 – that whatever happened, they would do well enough in the election to avoid Corbyn resigning (remember Murphy’s ‘every seat is up for grabs’?) and secondly, they may have fatally underestimated the resilience and organisation of the Labour right. The latter knew exactly what to do once 2019 was lost: rally behind Starmer, keep a low profile, get read for a purge of the Corbynites from at least the upper ranks of the party.

Keir Starmer had no problem in the early, crucial days of the campaign styling himself as a left-wing radical (as laughable as the claim may seem to many familiar with his career in Public Prosecutions). RLB could easily have outflanked him from the left on green politics, public ownership, anti-racism, and anti-war politics. Corbyn won in 2015 and 2016 because he understood the membership and was open about his own politics. RLB made several clumsy concessions to journalistic opinion that made her and Starmer seem pretty similar. She signed up to some dodgy pledges on antisemitism; she promised to press the nuclear button; she made noises about ‘progressive patriotism’. A decision was clearly made early on to look tough in the areas that Corbyn looked weak. But Corbyn never looked weak in these areas to the Labour selectorate – these were the things they liked about him. No nuclear fetishism. No compromise on migrants’ rights. No equivocation on the Israel-Palestine question. Just as Labour members previously voted for Corbyn knowing that these things could be electoral liabilities, principled, clear stances win dividends with the membership. Once Corbyn became leader, he and his team too often failed to lead in these areas and instead looked to appease their critics. RLB was showing in her campaign that the Labour left had not yet found the resolve to fight on these issues and that her leadership would suffer from the same wrong-footedness as Corbyn’s. This is why Starmer is going to win: his campaign in the early days looked surefooted, even if his politics are guff.  

On the eve of an inevitable Starmer victory, reports emerged from excited staffers about what they plan to do in office. A shadow cabinet well to the right of Ed Miliband’s; a ‘purge’ of existing Corbynite personnel; and (perhaps most importantly) a polite but firm request for the resignation of left-wing General Secretary Jennie Fornby. In a few weeks Corbyn’s legacy could be completely eradicated. The institutional weight of the party remained firmly on the right even during Corbyn’s tenure. The few meaningful changes of personnel won by Corbynism will be easily shaken off. Next will be the erosion of the policy platform. Starmer has already indicated he won’t be keeping the more ‘fringe’ stuff (the four-day week; worker-ownership schemes; free broadband – all announced but left under-developed by McDonnell). If his rumoured Shadow Cabinet is anything to go by, there is likely to be no meaningful commitment to expanding public ownership, scrapping tuition fees, democratising the economy, or even re-nationalising the NHS. Instead expect some targeted public investment and tweaks to the welfare state.

Starmer’s public style in recent weeks – a non-presence in the early weeks of the Coronavirus crisis; a deference to the government’s public health approach; waffly non-policy about banding together and fighting the virus – indicates exactly what kind of leadership we can expect under him. I half expect him to announce the abolition of the Labour Party due to it being improper to have a formal opposition in times of crisis. It is not clear if Starmer’s ‘forensic’ style belongs in a political party at all or if it is more like the loyal, constructive advice of government experts. Those who are now sighing with relief because the long-anticipated ‘effective opposition’ is on its way all really seem to want done with the tedium of party politics. Certainly, they want done with Labour party politics. Their vision is that of an elite social layer of technocrats who may not be formal officeholders, but are well-placed to intone sternly at the populist jesters who are. The goal is not to win power, but to berate the populist right from positions of professional high status. So it is obvious then that Keir Stermer – the least political of politicians; a man of impeccable professional credentials; a man ill-suited to any form of party life – is their man.

At the next election, then, if Labour exists at all, it will likely wind up running to the right of the Tories on the issue of the deficit and public finances. I do not mean by this that Labour will be running to the right of the Tories on public spending generally. No doubt they will promise a few extra billion on the NHS or on infrastructure spending (not too much, mind). But, given Starmer’s own disposition and the politics of his associates, they will be occupying the dull, ‘sensible’ terrain recently vacated by Johnson’s Tories. Labour will be weighted towards a fiscal conservatism that has never really mattered to the Tories when in power. Starmer’s Labour will cast itself as the party of professional competence in distinction to Johnson’ reckless Tories. Starmer will promise to close the deficit through some tax increases and some better provisioning at HMRC. Johnson, meanwhile, will run on letting him finish what he has started: ‘record’ NHS investment; more nurses; more doctors; more infrastructure; more jobs. The coming recession – perhaps even depression – may not be blamed on the Tories because it has come in the form of a public health crisis. Starmer will be in no position to exploit the actual failures of the Tory response (his whole approach has been to loyally advise rather than criticise); nor the underlying economic and social weaknesses that have made Britain so susceptible to crisis (that would require a radical critique of privatisation and financialisation, which Starmer has no appetite for). So it is that Labour will be led by its most hesitant, cautious, pro- establishment leading politician in an era of unprecedented crisis and turmoil. You couldn’t imagine a better death sentence.

Some of this is the left’s fault. The left was in power for four years. For a moment, it looked unassailable. It had the leadership and Shadow Cabinet; it had the unions; the General Secretary was supportive; there was an NEC majority; the membership was united. Only the MPs and some official enclaves (Deputy Leadership; personnel at HQ; councils; the Mayor of London’s office) seemed to be holding out. A wave of departing centrist MPs only seemed to improve the left’s prospects. But ultimately Corbynism failed. This was partly due to Corbyn and McDonnell’s reluctance to further alienate the Labour right. They possibly saw it as necessary to keep the old Labour right as well as the left-leaning fractions of liberalism on board. But the latter certainly were never on board and would never be reconciled to Corbynism. The left more broadly was often emollient. It backed away from Open Selection. It allowed itself to be dragged towards a second referendum on Brexit. It accepted the right’s definition of anti-semitism to the neglect of Palestinian rights.  

If there is a rational kernel to the membership’s (and some ex-Corbynites) support of Starmer it is that they now believe it is not possible to fight a war on two fronts. Corbynism’s fight was with two arms of the British establishment and the state: on the one hand, the Tory right and, on the other, the liberal centre. To win Corbyn had to demolish the political leadership of liberalism and hegemonise its base. Only after that could it pose a serious challenge to Toryism. Because Corbynism failed, many of its former supporters will now accept their subordination to liberalism. Starmer represents capitulation on the first front. The problem is he also represents a priori capitulation in the fight with Toryism.

Nationalise Everything? - Rishi Sunak's Brave New World

In the midst of the Coronavirus crisis, the British government has announced plans to subsidise 80 percent of the salaries of workers in firms threatened with closure. If British lobby journalists are to be believed, the government has just 'nationalised' the entire private sector. Except it hasn't. What it has done is offer an effective subsidy to private firms to continue paying wages. Crisis capitalism is no stranger to subsidies: you can think of Quantitative Easing (whereby a central bank buys up debt held by private sector financial firms in order to provide them with cash) as a kind of subsidy. Since 2008 capitalism has become increasingly reliant on these elaborately stylised subsidies, except because they are done by central banks and have complicated names we don't think of them as such. Where this new intervention does differ from the past – in Chancellor Rishi Sunak's words it's 'unprecedented' – is in the particular conditionality of the subsidy (it has to go to workers rather than bosses) and is coming direct from central government rather than from a delegated 'non-political' authority like a central bank. For the first time in the Coronavirus crisis, the government has broken a taboo of neoliberal orthodoxy: central government – the Treasury in particular – is going to spend a lot of money to keep people in work. That said, the full coercive power of the law will not be brought to bear on firms, as it remains an essentially voluntary arrangement. Workers will likely have to push for firms to adopt it.

The policy comes later than other countries, far beyond the point at which a full-scale health and economic crisis could be avoided, and its very necessity points to underlying weaknesses in the British model of capitalism. The absence of trade union-negotiated employer commitments and a threadbare social safety net has meant that few automatic stabilisers now kick in in a crisis. The British economy is built on a deregulated labour market and the ease with which workers are 'hired and fired' is responsible not only for the Tories' 'jobs miracle' but also the growth of a precarious sector which is extremely vulnerable in a downturn. A common facet of advanced capitalist economies today is a protected core workforce (with full-time hours, protected contracts, and trade union representation) accompanied by a growing peripheral precariat. The peculiarity of British capitalism is that the core workforce is vulnerable to lay-offs, while the precariat is even worse off.

Labour Shadow Chancellor John McDonnell's plan for the government to cover up to 90 percent of salaries, whilst also taking a range of steps to ensure the welfare of the newly unemployed, the self-employed (who will effectively become unemployed during the shutdown), and the sick would have been far more effective, but was always a pipe dream with this Conservative government. McDonnell's plan made a specific commitment to raise sick pay and unemployment compensation up to the level of the real living wage. No such provision has been made in the actual announcements. The TUC has trumpeted its involvement in this undoubtedly positive outcome for some workers, but typically for today's unions, they covered a privileged layer of workers but failed to fight for the most vulnerable. As the the Prime Minister promised that restaurants could convert themselves into takeaways during the closures, it is worth remembering that the likely delivery drivers enabling these services will be precariously employed gig economy workers for platforms like Deliveroo. There was precious little for them in the announcements. In essence these measures enable just enough social reproduction (that is, the basic stuff of everyday life) to keep the reproduction of capital going.

So what do the measures achieve? Firstly, the government has offered grants to all employers of any size that cover 80 percent of each worker's wage. If the offer is widely taken up, it will keep people in work. It violates a common assumption in market societies that workers kept on the payroll despite their underlying redundancy is a dangerous inefficiency. It distorts what are supposed to be the basic tenets of a market economy and as such could only be tolerated in the most extreme of situations. That is an indicator of how bad things are. In context the new wage subsidy is wholly necessary to avoid an immediate social catastrophe. Next, there are more measures for business including postponed tax payments and more loans that follow the £330 billion announced a few days ago. Then, there is a volley of measures that cover Universal Credit claimants (an extra £1,000 a year on the basic rate), private-sector renters (covering 30% of local market rents), and the self-employed (removing the minimum income threshold on Universal Credit so that self-employed people can access an equivalent to statutory sick pay). What it does not do is provide further certainty for renters beyond the suspension of payments previously announced, nor does it increase sick pay or reduce the five-week Universal Credit waiting time. Together, these measures direct low-paid renters, the self-employed, the unemployed and the sick towards the bureaucratic, punitive and underfunded benefits system. For these people, the benefits system remains below its 2010 level of provision, while also being harder to access. This is potentially disastrous because the people who need support most will have to jump through hoops to get it. As Labour leader Jeremy Corbyn said in the Commons this week, in this crisis, the health of all of us is dependent on the health of the most vulnerable.

It is worth putting the scale of these measures in their proper context. The Conservatives are responsible for a shredding of the benefits system that was supposed to be in place in times of crisis. They have also presided over ten years of real-terms cuts to the NHS, which now threatens to collapse in the wake of unprecedented demand for ICUs. A deregulated labour market – championed by both Labour and Conservative governments alike – has reduced workplace protections and made jobs much more vulnerable in a crash. Restrictive trade union laws implemented by successive governments since Thatcher have reduced workers' bargaining power. Perhaps most pertinent – but least remarked upon – is the growth of private-sector debt and the entanglement of non-financial corporate firms in the growth of financial markets – especially since 2008. In this crisis we have not yet seen any banks collapse, despite the nosediving stock markets, the ructions in short-term lending markets, and the fleeing of investors towards cash and highly liquid assets. This is partly because monetary institutions have an existing arsenal of weapons – rates cuts, repo and commercial paper market interventions, Quantitative Easing and dollar swap lines – by which cash can be pumped into markets and debt payments and other bills can continue to be covered. But banks are also in a relatively healthier state because the riskiest fringes of the securitised mortgage market have disappeared. The real threat comes from heavily indebted corporate firms, which for years have failed to make investments in productivity-enhancing technology, training the labour force, or in increasing wages. Households are also doing badly: remember that it is productivity that allows wages to sustainably rise and in a low productivity, labour intensive economy, returns to labour stagnate while retained earning go to the bosses. Stagnating earnings have led households to take on debt (credit has remained plentiful, as anyone with a credit card will tell you),  in order to fund lifestyles dependent on globalised consumption. Instead, the flood of cheap money rolling in from central bank interventions and low interest rates has enabled them to borrow extensively. But even for relatively well-performing firms, markets are fundamentally future-oriented. As the scale of scheduled debt repayments grows relative to forecasted future income, firms can face insurmountable solvency issues. The Coronavirus crisis – which has buckled the labour supply and crushed consumer demand – has radically curtailed expected future earnings. This along with the heavy burden of debt is what threatens a complete corporate meltdown. To be clear, no country in the world is going to survive this crisis unscathed. Few are as ill prepared for it as the UK.

What comes next may be equally as mould breaking. Because supply lines in contemporary capitalism are global and production is generally low on inventories, disruptions can cause rapid collapses in output. As Coronavirus spreads, we are likely to see production in many industries cease. Food production – which remains labour intensive and therefore equally vulnerable to a pandemic – could also suffer. So far the empty supermarket shelves have been the result of spiking demand as panic-buying increases. We could soon see supply-side shortages as global supply chains are interrupted. The challenge for the government will be to maintain food supplies by substituting domestic production for imports (ironically, such import substitution strategies were once staples of Third World economies and were much frowned upon by the leading lights of global capitalism). Another interesting question is the energy supply, where a major outbreak threatens staffing. Finally, and most crucially, is the rate of infection among health service workers. In each of these areas, the government may have to introduce advanced safety measures to protect their respective workforces from viral contagion. If the outbreak is very severe, the state will have to take an almost militarised, commanding role over key economic sectors. All of this assumes the worst, but it is the government's job to plan for such eventualities. For a democratic socialist like me, the prospect of state-command capitalism is not a delightful one. Violent, suppressive measures – especially in border enforcement and in the prison system – are a likelihood. Tory governments may relish the latter, but they do not usually seek to take such a directive role over the pillars of economic production. The next few months could see the government forced to take up a much more interventionist role than its current wage subsidy policy does.

The incompetence of the government in the early weeks of the outbreak has been widely under-reported, perhaps because of a reluctance of major journalists to look like they are scaremongering. The government's weak 'advice' for people to stay away from others has been fundamentally undermined by delays to the wage subsidy announcement. They may deny it ever existed now, but the early strategy of creating 'herd immunity' (maximising the spread of the infection while not disrupting normal economic activity) undoubtedly helped contribute to the impending disaster. This does not inspire much faith in its ability to rationally plan and organise the kinds of economic interventions that may soon become necessary. Something that has characterised the last forty years of capitalist state development is a general reduction in its capacity to take outright directive actions. The era of outsourcing investment to the private sector and delegating regulation to 'depoliticised' institutions has created a vast but hollow state structure. There is no guarantee that the government will be able to rapidly expand the state's capacity and expertise. 

Finally, there is the question of how to fund a growth in public expenditure in the middle of an economic downturn. No government – Labour or Tory – would dare raise taxes on such a weakened private sector. Instead the government will increase public borrowing. In the last crisis yields on government debt fell as investors sought a harbour in a storm. This time – at least for the time being – investors are keener on hoarding cash – dollars in particular – as the most liquid of all assets. Central banks will have to commit to purchasing government debt – possibly, in another violation of neoliberal lore – directly from governments rather than in so-called secondary markets. Convincing central bank intervention should bring down yields and stabilise prices, meaning the state can borrow more for less. Panicked investors might seek to flee the UK, leading to a crash in sterling (we have seen the pound falling relative to the dollar this week). To combat this, the government may need to break the foundational macroeconomic law of neoliberalism and impose capital controls, compelling domestic investors to put their money into public debt.

Capitalism, then, but not as we know it. Or at least, not as its propagandists have described it. In truth, capitalism has been feeding off public subsidies ever since 2008. The jobs miracle of 2010-2019 can even be traced back to the low interest rates and the flood of cash ploughed into the private sector by central banks. In the coming year or two, the rules on the limits of state involvement in the economy (particularly where fiscal policy, state direction, and civil liberties are concerned) are going to be upended. The left can make demands in this context, but it should not mistake what is happening for a wholly progressive change. This is not a case of 'we're all socialists now'. Indeed, the government will attempt to restore capitalist profitability by any means because its legitimacy depends on the social function of profit. The left should seek to use this crisis to make clear the underlying iniquities driving it and for the expanded functions of the state to take a more democratic and socially just form than they will under the Conservatives.