Labour after the reshuffle


The reshuffle itself

First the good news on Labour’s reshuffle. The sacking of Dugher and McFadden shows that straightforward disloyalty and sabotage will not be tolerated.

The Labour left for most of its history was in a minority in the Labour Party. While the left argued for its policies within Labour, it never preferred the victory of the Tories or sought to sabotage the Party during crucial confrontations such as elections, main campaigns, key debates etc. The Labour left remained essentially silent on policy during election campaigns once the manifesto was decided and clearly and straightforwardly preferred the victory of the Labour right over the Tories to a Conservative success.

To give them their due, sections of the traditional Labour right also respected this. Dennis Healy radically disagreed with Tony Benn but when it came to Chesterfield elections Healy campaigned solidly and skilfully for Tony Benn. Similarly, and reciprocally at the Oldham by-election, it is no secret whatever that Labour candidate Jim McMahon and Jeremy Corbyn represent different wings within Labour but the Corbyn team gave solid support to McMahon and McMahon refused to create a distance with Corbyn. A broad party such as Labour, which is inevitably a coalition of views, relies on such loyal functioning.

The type of disloyalty shown by Dugher and McFadden was something different. Dugher deliberately gave the type of ammunition the Tory press wanted to attack Jeremy Corbyn, and McFadden deliberately aided Cameron in the House of Commons on terrorism. Their behaviour represented direct wrecking activity – aiding the Tories against the Labour Party.

The issue is not only what McFadden said, which was a deliberate attempt to misportray the views of Jeremy Corbyn, but their deliberate timing, a real issue in politics, which was directly done in a way to aid Cameron.

No Labour Party leader can or should tolerate this. Similar disloyal behaviour has to be dealt with in the same way. Labour has to remain a broach church but that can only happen with loyal functioning.

Maria Eagle’s replacement by Emily Thornberry is simply a question of policy – Thornberry is closer to Jeremy Corbyn’s view on Trident.

In the end Benn will have to go

The problem issue is of course Hilary Benn. To give him his due, Benn has not set out to deliberately and disloyally destabilise Jeremy Corbyn – he has stuck to his foreign policy brief. Nor is the issue about Benn’s vote in the House of Commons on Syria – once it was decided there would be a ‘free vote’ Benn had the right to vote as he did.

The issue is that Benn’s policy on the most important foreign policy issue of the day, Syria, was clearly against that of the majority of Labour Party membership, the majority of the PLP, and even the majority of the Shadow Cabinet. That is a non-viable policy difference.

The demand that Hilary Benn be Labour’s Foreign Secretary, and thereby set Labour’s foreign policy agenda, is simply a demand that the Labour Party cannot decide its own foreign policy and that every organisation of the Labour Party can be overruled by one person – or more precisely by one minority wing of the Labour Party.

This is quite apart from the personal fact that Hilary Benn has a proven track record of disastrous policy misjudgements on wars – supporting both the invasion of Iraq and the bombing of Libya.

Not only has the issue of Syria not gone away but this is a period of semi-permanent wars and crises. Issues such as Syria will constantly recur. Labour has to have a policy on them and given his track record Benn will have the wrong position on them.

A key issue on Syria was that Benn was clearly in a minority in the Labour Party. The next inevitable confrontation may not be so clear.

Whether Benn should be sacked now was a tactical calculation that Jeremy Corbyn can take in light of a number of factors in the situation. But what is clear is that it there will be a new confrontation with Benn – it is only a matter of time.

Economic policy

However, the issue of Shadow Cabinet composition has been decided for the present. The Labour left cannot be turned inwards but must lead the Party in the fight against the Tories.

An excellent start was made on this in the campaign against tax credits and also in the decision to call for renationalisation of the railways – both highly popular policies. John McDonnell also made an excellent strategic beginning by breaking with the ‘deficit denial’ that had characterised previous Labour confused economic policy.

As the British, global and US economies are slowing, taking the shine off Osborne’s fake claims of economic success, this means that economic policy will become the key issue not only strategically but increasingly immediately. This is true not only for direct reasons but because the deepening crisis in the NHS and the results of cuts in public spending, such as the obvious inadequacy of flood defences, will pose the issue of how to finance the necessary spending in those areas.

On economic policy, good ideas have also recently been put forward by John McDonnell on industrial policy – clearly strengthened by working on input from parts of his economics advisory team such as Mariana Mazzucato. But the key macro-economic issues of growth, investment and budget deficit, will continue to be the most decisive of all. It is on these that the Tories will also concentrate their fire and it therefore on these that Labour’s ability to win the election, its perception as economically competent or not, and its position in the polls will depend.

Marx & Keynes

On economic policy there is a real basis for going forward, for clarity, in a clear alliance between Marxists and real supporters of Keynes. The immediate fulcrum of this remains the question of the budget deficit as well as spelling out in a popular fashion the conclusions that follow from this.

Marx’s economic analysis drew a clear distinction between two sections of the economy – the production of means of production/investment (Department I) and the production of means of consumption (Department II). Only increases in Department I produce increases in output as only Department I is an input into production. Therefore, in Marx’s analysis it was necessary to clearly distinguish between investment and consumption.

Professor Victoria Chick, one of top experts on Keynes, has noted the same position of Keynes on this in regard to budgetary policy:

‘Keynes’s view of budgetary policy… is usually much misrepresented and current discussion of the budget in normal times is still somewhat confused. He distinguished between the “ordinary budget” or current account, and the capital budget or spending “below the line” – a distinction we make today. The latter was to be used to compensate for failings in private-sector investment….

‘I [Keynes] should not aim at attempting to compensate cyclical fluctuations by means of the ordinary Budget. I should leave this to the capital Budget.’ …The two budgets serve different purposes.’

Not merely is this correct economics but it leads to a clear and popularly comprehensible position on budget deficits. Current expenditure over the business cycle should be financed by taxation – not borrowing. Borrowing for investment on the other hand is correct as investment leads to an economic return.

Therefore, the position of Labour on budget deficits should be not to borrow over the cycle for consumption but to borrow for investment. As soon as that clear distinction is put in place not merely will it become possible to frame a coherent economic policy but an ability to refute Tory attacks will immediately occur.

It is the confused refusal of so-called ‘Keynesians’, contrary to the views of both Keynes and Marx, to distinguish clearly between investment and consumption that both creates incoherent economic policy and leave Labour open to Tory attack – the two of course being directly connected.

Naturally the general public will not become interested in the distinction between Departments I and II of the economy (Marxist terms) or the capital and current budget accounts (Keynesian terms), but they do understand the practical consequences, and this can be popularly presented. The key is to explain that Labour’s policy for growth is based on increasing investment and its key practical policy is a National Investment Bank.


In short there will be a further confrontation with Benn over wars – it is only a matter of time. But for the present the issue of the Shadow Cabinet is decided. The key now is to turn Labour to outward campaigning, and the strategic key is to get the maximum clarity into economic policy.