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The Elephant in the Room : Why Gordon Brown and New Labour got things so Wrong

Christopher John Nock
p. 11-27


From the outset, the New Labour project relied on economic growth to right the social ills of British society. Growth was to provide the resources needed to improve services and increase opportunities for all. Growth required the continuation of Thatcherite neo-liberalism and an embracing of globalisation. As Chancellor, Gordon Brown was central to promoting and pursuing this approach. Throughout, the claim was that traditional Labour principles remained intact, but that the socio-economic context in which they were to be pursued had altered. From 1997 onwards – as the British economy tended to expand – this claim seemed to hold some water. However, the onset of the economic crisis exposed the blatant limitations of New Labour’s approach. This paper explores these limitations. It argues that New Labour’s dash for growth – overseen by Gordon Brown – led it to misunderstand the social damage caused by thirty years of neo-liberalism and the gross limitations of its own approaches to rectifying it.

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1From its inception, the New Labour project relied on economic growth to right the social ills of British society. Growth would provide the resources to improve the NHS, education at all levels, to promote social inclusion, and to increase opportunities for all – especially the least advantaged. Growth required the continuation of Thatcherite neo-liberalism and an embracing of the realities of globalisation. Yet, old Labour concerns for social justice and equal opportunities could be accommodated provided appropriate policies were developed that encouraged economic activity rather than draining it. As Chancellor, Gordon Brown was central to promoting and pursuing this approach. It was an approach that generated a new set of meanings for traditional Labour terminology that had previously been associated with the post-war welfare state and its attendant Keynesian management of the economy. The claim was that traditional Labour principles remained intact, but the socio-economic context in which they were to be pursued had altered. From 1997 onwards – as the British economy tended to expand – this claim seemed to hold some water. However, the onset of the economic crisis and the subsequent dramatic downturn in the UK’s economic fortunes exposed the blatant limitations of New Labour’s approach. Following the 2010 change of government in the UK, this article explores the failings of the New Labour project. It argues that New Labour’s dash for growth – overseen by Gordon Brown – led it to misunderstand the social damage caused by thirty years of neo-liberalism and the gross limitations of its own approaches to rectifying it.

New Reality, Same Principles?

  • 1  Nock, C. J., 2006.

2When New Labour came to power in 1997, it praised the fundamental aspects of Margaret Thatcher’s economic reforms. It endorsed and continued the marketisation of much of what had been purely in the public realm. Emphasis had shifted away from the “old” Labour view of the state as a provider of public services and welfare provisions. New Labour was keen to cement its own position as the guardian of Britain’s brave new economic world. It sought to reinforce the position of the state as a regulator of private suppliers of “public” goods and services and a facilitator of private investment into these services and their provisions. This process ran parallel with the continuation and further development of a related project begun by Margaret Thatcher – the residual approach to welfare. Rather than being concerned with meeting the basic needs of all citizens, the state should focus primarily on the needs of those genuinely unable to meet their own needs through labour market activities. The labour market represented the best mechanism for satisfying both basic and personal needs. As such, it should have priority over state sponsored welfare. In New Labour’s view, as in Margaret Thatcher’s, residual need was best dealt with via highly focussed provisions targeted at particular individuals and groups. This aspect of the New Labour project did differ from Margaret Thatcher’s in one important respect. Margaret Thatcher had considered markets to be neutral in the way they distribute opportunities. New Labour’s view was rather different: labour markets in particular tend to operate to the disadvantage of certain groups which require particular forms of assistance if they are to enjoy access to the opportunities offered by through the world of work.  Some commentators took this to mark New Labour’s retrieval of one of the main planks of the 1945 social-democratic model: the notion of the state as an enabling force1.

  • 2  Nock, C. J., 2010.
  • 3  Ibid.

3Once in office, New Labour moved quickly to reinforce its claim to economic competence. Within weeks of entering 11 Downing Street Gordon Brown transferred control of interest rates to the Bank of England seeking to de-politicise the rate setting process. He found funding for the government’s welfare-to-work programme by imposing a windfall tax on privatised utilities. Under his guidance, the Treasury undertook a year long Comprehensive Spending Review. As a result, spending on health and education was increased. The Financial Services Authority (FSA) was established to take over the regulatory functions previously performed by nine separate agencies. Throughout this process, Gordon Brown stressed three main watchwords: “prudence, stability and caution”2. Affordable investments for the future would be made. The aim would be progressive and sustainable growth. In fact, growth was the central plank of all New Labour economic, social and public policy. Growth would translate into increased employment. Job opportunities became the acme of opportunities generally, and the only sure path to social inclusion. Old Labour concerns with managing disparities in wealth through progressive taxation were dismissed. Large scale inequality was to be considered acceptable – perhaps even laudable – provided it contributed to economic growth. In effect, everything now hinged on achieving sustainable growth3.

  • 4  Nock, C. J., 2009.

4The recognition that the labour market often fails to distribute opportunities in a neutral manner meant New Labour could seek to rectify this defect by offering help to disadvantaged individuals and groups. The underlying supposition was that properly enabled people know – at least within the restrictions of the market – what their own interests are and how best to pursue them. New Labour’s preference was to seek to promote employment opportunities through labour flexibility, not Keynesian management. Aligned with this was a second concern that reinforced the privileged position New Labour gave markets. Under Tony Blair, the government seemed convinced by American accounts of what was required to compete in the emerging global market place. The key elements in this process were taken to be the elimination of trade barriers and the commitment to flexible labour. This reinforced other key elements of New Labour’s economic approach: its commitments to low taxation and light business regulation. The flexible labour market was to be a central pillar in responding to the economic uncertainties of the emerging global economy. It was incumbent upon all workers to monitor and adjust to changing opportunities on an ongoing basis. Those who became unemployed and, indeed, those yet to find their way into employment, were required – as they had been under the Conservatives – to actively seek work.  As a consequence, under New Labour, Britain evolved more fully into an American style workfare state than it had ever done under Margaret Thatcher4.

  • 5  Nock, C. J., 2006.

5The state increasingly focussed on seeking to redefine its role from that of a direct supplier of public services to that of a purchaser of cost-effective services that might be supplied on its behalf. As a consequence, the state sought to instil private sector ethics into both the public and the third sectors with a view to promoting competition between potential suppliers, be they from the private, the public or the not-for-profit sector. At the same time, the government insisted, the third sector could help repair the damage caused to the social fabric by the state’s retreat from post-war universality. As Prime Minister, Tony Blair was fond of insisting that Labour’s principles remained the same and what had changed was the economic context in which they needed to be pursued. As such, New Labour reconstructed old Labour language to reflect the new economic context. Three key principles continued to be emphasized – “justice,” “opportunity,” and “welfare”. In the context of the time, “opportunity” lay primarily in the world of work and its attendant material rewards. “Justice” required only that no one be excluded from access to this world of opportunity for reason of irrelevant prejudice. By taking advantage of the opportunities available in the world of work, people would secure their own welfare. Those unable to find their way into work would be helped to do so. Those unable to work – the unfortunate or the unlucky – would have their residual needs met by a targeted set of welfare services supplied on the basis of competitive tendering. This happy tale was not without its critics. Some argued that the New Labour socio-economic approach merely served to entrench more deeply Margaret Thatcher’s neo-liberalism. Others suggested that New Labour’s use of traditional language was a prime example of – largely meaningless – Blairite spin5.

  • 6  Lee, S., 2009, chapter 1.
  • 7  Nock, C. J., 2006.

6However, it has to be said that, on the whole, most suspended their disbelief as the economy grew, bringing significant benefits in its wake – especially falling unemployment, rising real wages and, for many, increasing economic opportunity. Over time, the expanding economy was also to enable New Labour to increase investment in the public services – most notably, the NHS and education at all levels. By late 2005, there was little doubt that New Labour and its Chancellor believed it had the economy and associated policies generally correct. Since 1997 – while not avoiding the occasional downturn – the UK had enjoyed a period of genuine and sustained growth. In comparison with similar European economies, this growth looked relatively strong. According to Gordon Brown, the relative success of the UK economy could be explained by three of its core features: light regulation achieved by a process of minimum standards; flexible labour markets; and market friendly social and public policies. These three features had been consciously pursued by New Labour. As such, under Tony Blair’s leadership, the emphasis was on market-led modernisation of working practices, the broader economy, welfare provisions, and public services6. The rise of the regulatory state and the target culture in the UK was a particular response to the demands of globalisation and its attendant marketisation of society. The state may set goals and targets, but must leave suppliers free to fulfil their contractual obligations as they themselves see fit. Those obligations must be developed in response to the ongoing balancing of stake-holder interests. As such, from the British perspective, globalisation demanded a significant reduction in the state’s agenda setting power that had been associated with a now defunct modern industrial epoch. What were required in the global era were strategies for dealing with an uncertain world in a time of great change. Indeed, from the British perspective, change now seemed to represent the new certainty. In its leadership role, government should listen and co-operate where possible. In particular, it should listen to those with expertise. This approach seems to have been informed by Tony Blair’s own brand of pragmatic opportunism: what counts is what works7.

An Ideology of Prudence?

  • 8  Lee, S., 2009, pp. xiii-xiv.
  • 9  Ibid., chapter 2.

7Prior to the ongoing economic crisis, this British solution seemed relatively successful. Indeed, as the leadership changed hands from Tony Blair to Gordon Brown, the latter reflected with a degree of content upon his achievements as Chancellor of the Exchequer. It appeared as if he had delivered the UK economy from the Conservative problem of “boom and bust”. He had presided over the “longest period of economic stability and sustained economic growth” in the country’s history. On becoming Prime Minister, Gordon Brown insisted that Britain was in a position to become “one of the great success stories in the new global economy”8. Beyond Britain, he would work to help reinvent the institutions of global governance, and secure greater justice in the global economy. However, Gordon Brown’s ability to embrace neo-liberalism as the proper response to the challenges of globalisation represented a significant shift of views from those he had held earlier in his career. From the time Tony Blair gained the leadership of the Party, and during his tenure as Chancellor, Gordon Brown had evolved from an old Labour socialist critic of capitalism into an ardent defender of the free-market. The reality of neo-liberalism had clearly demanded a reassessment of Gordon Brown’s attitude towards free-market capitalism if he were going to be able to serve as Chancellor under Tony Blair. The Thatcher revolution had changed things so fundamentally that there could be no going back to “old” Labour certainties. Simon Lee pins the shift in Gordon Brown’s attitude on him coming to embrace of the philosophy of the Scottish Enlightenment9. In particular, Simon Lee suggests, Gordon Brown was affected by the writings of Adam Smith. Most important, in this regard, are Adam Smith’s views on the moral senses laid out in The Theory of Moral Sentiments, and some of his considerations on markets, the role of government, and the general interest of society explored more fully in The Wealth of Nations.

  • 10  Ibid., pp. 44-45.
  • 11  Ibid., p. 45.

8Adam Smith’s moral philosophy was most directly laid out in The Theory of Moral Sentiments. It would seem that Gordon Brown’s ability to come to terms with the post-Thatcher reality of free-market capitalism and globalisation was shaped by some of the key themes in that work. The major lesson to be drawn was that Margaret Thatcher’s promotion of self-interested individualism had neglected the broader aspects of human nature. Humans possess an innate moral sense which – at least under the right conditions – might enable them to develop selflessness. People need others, both neighbours and strangers, if they are to meet their own needs and flourish. Because of this, they are capable of acting from duty and not just self-interest. They are also capable of developing a concern for justice and the dignity of others. Interestingly, as Simon Lee indicates, Gordon Brown’s watchword of “prudence” – usually taken to convey the notion that due care would be taken with the economy – appears to have a deeper meaning drawn from Adam Smith’s considerations of the moral sentiments. For Adam Smith, there were at least two proper aspects of prudence. The lesser aspect was “the care of the health, of the fortune or the rank and reputation of the individual, the objects on which his comfort and happiness in this life are supposed principally to depend.” The superior aspect of prudence embraced “wise and judicious conduct, when directed to greater and nobler purposes....”10 For Adam Smith, this superior level was the prudence of the great general, statesman or legislator – not the ordinary person. One supposes that it is this superior level of prudence that Gordon Brown saw in his self – after all, it would be the type of prudence required of his own high office. The superior level of prudence requires “the utmost perfection of all the intellectual and all the moral virtues.” This type of prudence, according to Adam Smith, is “the best head joined to the best heart”11. It involves an expression of moral duty towards others. In short, it would seem, in the office of Chancellor, Gordon Brown supposed he was acting in the general interest of society forsaking his own baser instincts and desires.

  • 12  Ibid., p. 47.
  • 13  Ibid., p. 51.

9Confirming this theme, in 2006, Gordon Brown set out his vision for the 21st century. In addition to the recurring concern for economic stability, employment and improving public services, he identified new concerns: “the major challenges ahead are now also terrorism and security, global economic competition and climate change and meeting the rising aspirations of individuals and the yearning for stronger communities.” This yearning he linked to the fact that the British passion for liberty – despite Margaret Thatcher’s efforts – had not degenerated into “self-interested individualism.” Rather, as Adam Smith had suggested in The Theory of Moral Sentiments, the invisible hand process was complimented by “the helping hand of individuals supporting other individuals”12. For Gordon Brown, the key to giving further effect to this “helping hand” was the reinvigoration of civic society. His aim was to restore certain qualities to British society – “benevolence, improvement, the civic society and the moral sense necessary for social progress.” This, he insisted, could only be done through “families, voluntary associations, churches, faith groups and public service.” Gordon Brown claimed that “we, the British people, have consistently regarded a strong civic society as fundamental to our sense of ourselves – that moral space, a public realm in which duty constrains the pursuit of self-interest.” The state should help promote a “free and co-operative association in civic society” and “a shared feeling of mutual sympathy”13.

  • 14  Nock, C. J., 2007.

10A key tool in the reinvigoration of civic society – lauded by both Tony Blair and Gordon Brown – was supposed to be the third sector comprising of the voluntary and the not-for-profit sectors. The third sector, it was supposed, might help repair the damage done to the social fabric by the state’s own retreat from post-war universality. It was supposed to do this by cementing its own role as the prime example of the type of civil association the state now deemed necessary and wished to promote. A key problem with this strategy was that the state itself was already seeking to use the third sector in ways that undermined what it wished from it in term of civic renewal. By encouraging the third sector to compete with the private and public sectors in the delivery of goods and services required by the state, New Labour’s strategy tended to deflect many third sector organisations away from their traditional constituencies. This strategy also tended to favour larger and professionally run third sector organisations – those with the wherewithal to bid for contracts and ensure delivery. These are not organisations that are prepared to entrust their important business to volunteers who lack the professional skills and abilities required. As such, the types of opportunities for ordinary citizens that might underpin civic renewal were not forthcoming14. This is just one example of a broader and deep-seated problem that pervaded the entire New Labour vision.

  • 15  Lee, S., 2009, pp. 54-55.
  • 16  Ibid., p. 55.

11The broader problem with Gordon Brown’s vision of civic society was that it sat very uneasily with the emphasis on competition and the pursuit of risk, profit, and innovation in liberalised markets which are at the heart of the British model of political economy. This is a model that has encouraged self-interest and consumerism, and promoted the market to pre-eminence. However, in Gordon Brown’s broader political philosophy, limits should be imposed on markets, and a key purpose of civic society is to help generate these limits. It would immediately seem that civic society cannot do this properly if one of its main elements – the third sector – is being used by the state for commercial gain. Nonetheless, as Simon Lee highlights, the notion of limiting markets in Gordon Brown’s philosophy was rooted in a coherent liberal perspective which drew primarily from American liberal thinkers, in particular Michael Walzer15. With this, and other ideas borrowed from American liberalism, Gordon Brown’s personal political philosophy became increasingly distant from the socialist and social-democratic ideas traditionally associated with the UK Labour Party. Rather, it shifted toward a peculiarly American perspective which is on the one hand primarily pro-market, but on the other insists that some markets should be managed and, in some cases, restricted. As such, Gordon Brown’s political philosophy emphasised both the pre-eminence of markets and the importance of managing some sectors of the economy for the public good. Governments need to embrace the market as a support and to provide tax revenue to fund public services. At the same time, the market needs governments to make and enforce property rights, secure the rule of law, and to provide human and physical infrastructure16. On occasion, some markets need to be managed to restrict socially undesirable outcomes.

  • 17  Nock, C. J., 2010.

12Clearly, the British model does embrace important restrictions on the operation of markets. Like most other liberal-democracies, the main restrictions tend to apply in the realms of health and education. But these restrictions have been around in something akin to their present form since the foundation of the post-war welfare state. They have not been generated, nor can they be sustained by the type of civic society Gordon Brown alluded to. Indeed, under New Labour, both health and education became increasingly subject to the disciplines of the market. Supplies to both services were opened up to increasing competitive tendering, and management companies from the private sector were brought in to run some hospitals, schools, and even prisons. This type of development, combined with other strategies, meant that although New Labour’s vision of an enabling state did mark an advance beyond Margaret Thatcher’s neo-liberalism, it could not repair the damage done to the social fabric by the retreat from post-war universality. New Labour continued to give priority to markets over welfare and sought to promote employment opportunities through labour flexibility and economic growth. In this context, the enabling state took on a particular form. Gone were any genuine social-democratic concerns with individual autonomy or broader notions of well-being. The notion of “opportunity” was stripped of concerns about autonomy or the realisation of potentialities. Opportunity now lay solely in the world of work and its attendant material rewards. Welfare itself was devalued to a set of support services for the unfortunate or the unlucky. As such, New Labour’s language of economic justice – whilst not wholly meaningless measured against the yard-stick of the Thatcher years – always had a hollow ring to it. The market was pre-eminent, and the principles had to be continually massaged to fit its needs17.

13New Labour’s economic approach reinforced the message first rung out by Margaret Thatcher. The individual’s primary concern must be their own self-interest, pursued in a competitive market place. New Labour sought to graft a second message on to this: individuals also need to be good citizens. Good citizens behave in a civil manner, take an interest in others, and are willing to actively engage in assisting the less fortunate. In short, model citizens have a bounded competitive nature and recognise when their “natural sympathies” should supersede their competitive instincts. This lesson can apparently be learnt – or, at least, reinforced – through participation in such things as voluntary associations, faith groups and the like. But this account, I fear, misses the point. Such approaches cannot replicate what was lost in the marketisation of Britain. The post-war social-democratic state did recognise the fact that giving too free a rein to the market denies broad sections of society full citizenship and is likely to suppress what Adam Smith called “natural sympathy.” It makes the poor and unemployed dependent and – as a consequence – resentful. They depend upon the charity of their “betters,” and this tends to render those “betters” both arrogant and self-glorifying. In short, with no genuine notion of universal citizenship there can be no social solidarity, no mutual recognition, and no mutual respect.

  • 18  Nock, C. J., 2009.
  • 19  Nock, C. J., 2007.

14The post-war focus on basic needs and universality established in practice one of the fundamental principles of such a universal democratic citizenship: benefit by right, not by charity. It recognised that full citizenship requires sufficient education to use the vote effectively, along with protection from the misfortunes of ill-health and unemployment. Since Margaret Thatcher, the conditions necessary for a universal democratic citizenship have progressively drained away. The Thatcher revolution – and New Labour’s consolidation of it – has produced atomised, self-seeking, market orientated individuals not easily marshalled into a coherent citizenry underpinned by mutual respect. New Labour’s reliance on legal instruments in responding to social problems was a clear indication of this fact18. Since Margaret Thatcher, the British state has effectively given up on its responsibility to promote directly a meaningful vision of equal citizenship. And this will remain the case as long as its core concern remains cost containment secured through withdrawal from post-war welfare functions. This is not a breach that can be filled by participation in voluntary associations, which are themselves increasing influenced by the competitive spirit of the market place, and which are largely the preserve of the bourgeois classes. Voluntary associations – like families, churches, and faith groups – have nothing genuinely universal about them at all. The failure of New Labour’s strategy for civic renewal is indicative, I think, of the broader and deeper failure of its entire social and economic approach. Far too much of what New Labour attempted was rooted in values taken out of context and applied inappropriately19.

  • 20  Lee, S., 2009, p. 45.
  • 21  Ibid., p. 46.

15A further example of this lay in Gordon Brown’s appeal to Adam Smith. Adam Smith’s views – particularly as expressed through The Wealth of Nations – were also claimed by Margaret Thatcher. It is certainly possible to read The Wealth of Nations as a pure defence of laissez-faire capitalism, especially by emphasising the invisible-hand process identified by Adam Smith. This analysis appears to praise self-interested behaviour within the market for promoting unintended consequences to the general benefit of society. This reading, however, is far from the full story laid out by Adam Smith in The Wealth of Nations. As Simon Lee notes, on 25th April 2002, Gordon Brown chaired a session on the Scottish Enlightenment at the University of Edinburgh. The theme was “Can both the Left and Right claim Adam Smith?” Unsurprisingly, perhaps, the answer seems to have been “probably”20. Behind the invisible-hand process lie other key factors that the prudent statesman must consider, and which Margaret Thatcher’s naked neo-liberalism seemed to ignore – perhaps because they were inconvenient to her project. Among the most important of these were three main elements. Firstly, as already mentioned, selfishness is not the sole motivation of human beings. Secondly, contrary to Margaret Thatcher’s belief, the state has a positive role to play in correcting market failures – although the state itself is not the best provider of public goods. Finally – and most important in the present context – “producer interests should not be treated as synonymous with the public interest”21.

  • 22  Smith, A., 1937, p. 48.
  • 23  Ibid., pp. 249-250.

16According to Adam Smith, the public interest – or the general interest of society – lay primarily in achieving a condition of increasing opulence, or wealth. This condition could not, however, be considered to be in the particular interests of all the key groupings in society. While it is in the interests of the labouring majority and those that derive their income from rents, it is not in the interests of what Adam Smith identified as the “holders of stock”22 – or what we might call the “owners of capital.” In an expanding competitive market, the labouring majority would enjoy progressively increasing real wages. Similarly, those deriving their income from rent would see that income increase under competitive conditions. However, these conditions were far from ideal for the owners of capital. They sought to avoid conditions of strong competition because this was the least favourable condition for profit making. Ideally, they would prefer conditions in which they themselves enjoyed a monopoly. This group, because of the profit making nature of its activities, was regarded by Adam Smith as having a “superior knowledge of [its] own interest” than the other two groups. However, for the reasons just mentioned, the particular interests of the owners of capital were rarely compatible with the public interest. As such, for Adam Smith, the types of “new law or regulation of commerce” usually sought by the owners of capital tended to seek to reduce competition or promote other arrangements with a view to securing greater profit. Accordingly, when this group proposed new laws or regulations for commerce, “this...ought always be listened to with great precaution, and ought never be adopted till after having been long and carefully examined....” This was because it “comes from an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it”23. It seems to me that if this lesson was ever learnt by New Labour, it was lost in the dash for economic growth overseen by Gordon Brown.

  • 24  Nock, C. J., 2010.

17In large part, this seems to be because of a fundamental change in the nature of government in the UK overseen by Tony Blair. By 2000, the view had become that the government’s chief function was to lead rather than manage. Leadership was needed whenever circumstances were uncertain and outcomes largely unknown – as was the case in the era of globalisation. The forces at work in this era seemed too wide ranging and complex for the government to fully understand, let alone manage. What are needed for the global era are strategies for dealing with a changing and uncertain world. In its leadership role, the government should listen and co-operate where possible. In particular, it should listen to those with expertise. With their help, the government could develop general regulatory frameworks to help promote more desirable outcomes and mitigate the less desirable. The rise of the regulatory state in the UK marked a particular response to the vagaries of globalisation and the attendant marketisation of society. Within a regulatory framework, actors could be left free to pursue their own ends in their own ways, and the net result would be beneficial to the wider economy. Unfortunately – as was the case with the FSA – the regulatory process tended to rely on invitations to business and financial interests to help formulate the very regulations that would bind them. The prime purpose of authorities and regulations is to promote confidence by promoting sound practices and punishing sloppy, illegal or immoral behaviour. But, as in the case of the FSA, the emphasis on regulation tended merely to provide a veneer behind which such behaviour went on in any event24. This unhappy arrangement clearly ignored Adam Smith’s warnings on the interests of capital.

  • 25  Ibid.

18Again, this didn’t seem to much matter in the golden years of the recent British boom. As the owners of capital enriched themselves with the blessing of the government and its Chancellor, the economy in general enjoyed a sustained period of increasing opulence to the general benefit. For now, it appeared as if the invisible-hand was working as it should. However, once the financial crisis hit, several things became clear. There certainly had not been much natural sympathy at work in the financial markets or the banks. Indeed, behind the myth of a prudent regulatory framework, they had been freed to behave on the basis of their own naked self-interest. The capitalist classes and their minions had taken unprecedented risks which would require massive bailouts funded by tax payers. Much more shocking became the realisation that their self-interest had not even been constrained by the baser form of prudence identified by Adam Smith. As bailouts were prepared and books examined, it became increasingly clear that many of the financial institutions now demanding help had pursued immediate and short-term profit against their own longer-term interests. In short, a large number of these institutions had sought to maximise profits today, at the expense of the long-term sustainability of their businesses. It was reported that Gordon Brown found this unbelievable although, of course, it was certainly true25. The government had placed far too much faith in the supposed prudence of large financial institutions and that faith was horribly misplaced. Equally, it was also apparent that Gordon Brown’s own superior brand of prudence had been found wanting. He had greatly overestimated the prudence of the financial sector, and had overseen the development of an economic framework in which this sector had brought the country to its knees. His own judgement of what was in the general interest of society had been shown to be sorely wanting.

19For ten years or so, New Labour presided over the UK’s most remarkable period of economic expansion in living memory. It spent the end of its time in power presiding over the worst period in British economic history since the Great Depression. It might consider itself fortunate that it was able to pass this poisoned chalice on at the 2010 General Election. As we might expect, New Labour was very keen to claim responsibility for the boom years. Equally, it sought to wash its hands of the subsequent crisis, blaming world-wide economic conditions. I doubt, however, that things can be this easy. This particular crisis does seem to owe a great deal to New Labour’s own approach whilst in office under both Tony Blair and Gordon Brown. If the credit crunch had its roots in shoddy lending practices in the American sub-prime market, and the effects of the subsequent crisis have been felt around the world, there remains something peculiarly British about its consequences for the UK. The regulatory framework so lauded by Gordon Brown himself, and epitomised by the FSA, proved to be wholly unfit for purpose. The crisis made a mockery of Gordon Brown’s conviction that he understood the most important lessons to be gleaned from Adam Smith. As Chancellor, he gave too much to the owners of capital against Adam Smith’s warnings. At best, we might feel the sympathy we sometimes feel for the naive. But, lacking compelling evidence to the contrary, we would be just as entitled to feel the contempt usually reserved for those with overblown egos who behave stupidly.

20What is clear is that the New Labour project was, from its very inception, flawed to the point of incoherence, and it is this that I wish to identify as “the elephant in the room.” This expression refers to an important and obvious topic “which everyone present is aware of, but which isn’t discussed, as such discussion is considered to be uncomfortable”26. What New Labour did was to divorce the Labour Party from it social-democratic roots in pursuit of political power. In itself, this is not necessarily a bad thing. It may be that a political party can do more good by suppressing its instincts, accepting current reality, and working to improve things for those on the margins of this reality. And, indeed, some New Labour voices – most notably Tony Blair’s – did, from time to time, suggest just this. But even if this is true, Tony Blair’s claim that this was done in accordance with traditional Labour principles was a step too far. By rescinding the state’s capacity to promote a genuine universal citizenship, New Labour paid little but lip-service to social solidarity, social justice, and equal opportunities. This retreat also destroyed the state’s abilities to deliver social goods and services directly. This ability was increasingly placed into the hands of large commercial enterprises and professional third sector organisations. Commercial enterprises will only distribute these goods and services for profit and third sector organisations can only do so whilst they have the necessary resources. Along with everything else in New Labour’s brave new world, even citizenship was rendered a commodity27.


  • 28  Ibid.

21It is, perhaps, ironic that the New Liberal origins of the post-war British welfare state lay in a reaction to the failings of laissez-faire capitalism.  By the early 20th century the British state recognised that full citizenship required supports that only it could provide. It was simply not enough to rely on the workings of the invisible-hand supplemented by the vagaries of charity, be it private or public28. As I said, I suspect this lesson became lost in New Labour’s dash for growth. That the lesson was lost on Tony Blair is understandable. This is a man whose only real commitment seems to be to his own pragmatic self-promotion. It is far less easy to forgive Gordon Brown for losing the plot. At the intellectual level, some explanation can be found in his apparently selective reading of Adam Smith. At the practical level, my own suspicion is that the allure of high office required in him an intellectual transformation that came to terms with the economic realities of post-Thatcher Britain. This transformation – whilst no doubt genuinely pursued – seems to have been tainted by the need to adjust to win the prize. The attempt to combine neo-liberalism with civic virtue has always been fraught with difficulty. The best it can ever achieve is American style philanthropy which, at its worst, leads to the glorification of the giver and demands gratitude from the recipient, and at its best, abjectly fails to meet all need or promote equal citizenship. But if both Tony Blair and Gordon Brown share much responsibility for the ongoing economic plight of the UK, and for its continuing lack of a genuine civic culture, we should not spare the Labour Party itself its share of the blame. This is a Party that sold its soul for the sake of power and then accepted an incoherent set of attitudes and values from a leadership which merely served to mask the facts. Little wonder, then, that the elephant remains in the Party’s room.

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Coxall, B. et al, Contemporary British Politics: Fourth Edition, Houndmills: Palgrave, 2003., retrieved on 30th May 2010.

Hudson, J., Lowe, S., Understanding the Policy Process, Bristol: Policy Press, 2006.

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1  Nock, C. J., 2006.

2  Nock, C. J., 2010.

3  Ibid.

4  Nock, C. J., 2009.

5  Nock, C. J., 2006.

6  Lee, S., 2009, chapter 1.

7  Nock, C. J., 2006.

8  Lee, S., 2009, pp. xiii-xiv.

9  Ibid., chapter 2.

10  Ibid., pp. 44-45.

11  Ibid., p. 45.

12  Ibid., p. 47.

13  Ibid., p. 51.

14  Nock, C. J., 2007.

15  Lee, S., 2009, pp. 54-55.

16  Ibid., p. 55.

17  Nock, C. J., 2010.

18  Nock, C. J., 2009.

19  Nock, C. J., 2007.

20  Lee, S., 2009, p. 45.

21  Ibid., p. 46.

22  Smith, A., 1937, p. 48.

23  Ibid., pp. 249-250.

24  Nock, C. J., 2010.

25  Ibid.

26, retrieved on 30th May 2010.

27  Nock, C. J., 2007.

28  Ibid.

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Christopher John Nock, « The Elephant in the Room : Why Gordon Brown and New Labour got things so Wrong », Observatoire de la société britannique, 10 | 2011, 11-27.

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Christopher John Nock, « The Elephant in the Room : Why Gordon Brown and New Labour got things so Wrong », Observatoire de la société britannique [En ligne], 10 | 2011, mis en ligne le 01 mai 2012, consulté le 18 mai 2022. URL : ; DOI :

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Christopher John Nock

Chercheur à Kellogg College, Oxford

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