A year after new Labour's landslide victory, the purpose, nature and significance of the famous Blair project are as mysterious as they were on that magic May morning when the last government was sent packing. We know what the new regime is not; we don't yet know what it is. Patently, it is not socialist. It is not even social democratic or social liberal. It has abandoned the tradition once exemplified by such paladins of social democracy as Willy Brandt, Helmut Schmidt, Ernest Bevin and Hugh Gaitskell. It has also turned its back on Keynes and Beveridge. Its contempt for the French socialists is palpable; it believes it has nothing to learn from the German SPD and it seems more at home with Clinton's suburbanised New Democrats than with any left-of-centre European party.
More significantly still, it is manifestly unshocked by the huge and growing disparities of income engendered by the late 20th century capitalist renaissance. Like the Thatcher governments before it, New Labour espouses a version of the entrepreneurial ideal of the early 19th century. It disdains traditional elites and glorifies self-made meritocrats, but it sees no reason why successful meritocrats should not enjoy the full fruits of their success: it is for widening opportunity, not for redistributing reward. By the same token, it has no wish to undo the relentless hollowing out of the public domain or to halt the increasing casualisation of labour-white collar as well as blue collar-that marked the Thatcher and Major years. The notion that public goods should be provided by public authorities, animated by an ethic of public service to which market norms are alien, appears to be as strange to it as to its predecessors. It is more tender to the employers than to the trade unions, more anxious to court Rupert Murdoch than the Guardian, and more wary of the European social model than of the contemporary American mixture of hyper-individualism and social authoritarianism.
Yet the widely held notion that New Labour stands for the continuation of Thatcherism by other means is hopelessly wide of the mark. There are at least four crucial differences between the new regime and the old. Thatcherism was exclusionary; New Labour is inclusionary. Margaret Thatcher was a warrior; Tony Blair is a healer. Where she divided, he unites. Where she spoke of "enemies within," he speaks of "the people." The Thatcherites saw themselves as a beleaguered minority, surrounded by insidious, relentless and powerful enemies. There were always new battles to fight, new obstacles to uproot, new heresies to stamp out. New Labour, with the same, not particularly impressive, proportion of the popular vote behind it, speaks and acts as though it embodies a national consensus-a consensus of the well-intentioned, embracing rich and poor, young and old, suburbs and inner cities, black and white, hunters and animal rights campaigners, successful and unsuccessful. In place of the Thatcherite cold shower, it offers a warm bath, administered by a hegemonic people's party appealing equally to every part of the nation. This may have nothing in common with social democracy, but it is the nearest thing to christian democracy that modern British politics have known. And christian democracy is light years away from Thatcherism.
The second difference is more complicated. Like its predecessor, the new regime is for individual achievement, not collective action. But it has a radically different conception of the forces that empower achievers. For the Thatcherites, the vehicle of mobility was the undistorted market. Let market forces rip, they thought, and talent would automatically command its market price. The only role for the state was to eliminate the obstacles to the free play of market forces-including, of course, the obstacles presented by traditional elites. For New Labour, talent has to be nurtured before it arrives at the marketplace; and state intervention has to nurture it. Investment in human capital is the key, both to individual opportunity and to national competitiveness; only the state can ensure that the investment is adequate and fairly distributed. A meritocratic society is one in which the state takes action to raise the level of the talents-particularly the talents of the disadvantaged-which the market proceeds to reward. First, the state levels the playing field. Only then does the game commence.
The social vision is closer to Thatcherism than to any other tendency in postwar British history. Individuals compete. There are winners and losers. Having won in fair competition, the winners are entitled to their gains; indeed, they occupy the most honoured places in the social pantheon. As for the losers, their duty is to lick their wounds and return as soon as possible to the fray: New Labour has no patience with whingers or shirkers. But the political vision is far from Thatcherite. Underpinning the individualistic, mobile, competitive society is a dirigiste workfare state which would have warmed the cockles of Beatrice Webb's heart.
That leads on to a third, more paradoxical, difference. Like the Thatcher and Major governments, the Blair government looks across the Atlantic for inspiration, not across the Channel. Its rhetoric is American; the intellectual influences which have shaped its project are American; its political style is American. More important still, it shares the prevailing American view of the global economy, and of the relationships between states and markets within the global economy. Like the New Democrats, New Labour takes globalisation as a given and seeks to run with what it believes to be the grain of the global marketplace. That is why it is suspicious of the European social model, why it shares its predecessor's commitment to flexible labour markets and low social costs and why it sees the French socialists and German social democrats as suspect deviationists rather than as fraternal exemplars.
Unlike the Thatcherites, however, it also takes the European Union as a given, and seeks to run with the grain of European integration-including monetary integration. The paradox is that, as the Thatcherites correctly spotted, part of the purpose of the EU is to Europeanise a solidaristic model of the society and economy, drawn partly from the continental social democratic tradition and partly from the (also continental) tradition of catholic social thought. By the same token, part of the purpose of monetary union is to defend that model against the pressures of the global marketplace, to create a supranational space in which to protect the European social market from creeping Americanisation. New Labour, in short, is facing both ways. It is for Americanisation. Although it has not said so in so many words, it is also for the supranational space. How it will behave if and when it enters the space remains a mystery.
The fourth difference is more paradoxical still. The central theme of the Thatcher revolution lay in a combination of market freedom and state power-with the second as the necessary condition of the first. In theory the Thatcherites were for a minimal state. In practice, they assumed that centralisation was the only possible vehicle for marketisation; that if they were to hobble or crush the manifold institutional and cultural obstacles to their free-market utopia, they would have to make the maximum possible use of the powers which the ancient British doctrine of absolute and inalienable parliamentary sovereignty confers on the government of the day. This, of course, was the great paradox of Thatcherism. The new wine of the free market was to be poured from the old bottles of the British ancien regime. An individualistic economy was to go hand in hand with an authoritarian polity. But the paradox was inescapable. In ten years, the Thatcher governments transformed the political economy and the public culture. The new, low-tax, business-friendly, union-spurning, Murdoch-courting Labour party is a tribute to that transformation. In a more pluralistic polity, with the checks and balances that most modern democracies take for granted, nothing of the sort would have been possible.
New Labour, by contrast, has embarked on the most far-reaching programme of constitutional reform attempted in this country this century. Ironically, the Thatcherites deserve part of the credit. Old Labour was as committed to the doctrines and practices of Westminster absolutism as were the Conservatives. But in the Thatcher years, when Labour found itself on the receiving end of a ferocious centralism, far exceeding anything it had ever attempted itself, it underwent a death-bed conversion. Slowly at first, but with mounting enthusiasm as time went on, it embraced most of the constitutional agenda originally put forward by the SDP-Liberal Alliance, and later given a more radical twist by Charter 88. And the point of that agenda is to dismantle the ancien regime: to create institutional and legal checks and balances which will make it impossible for future governments to impose their will on the society and economy in the way that the Thatcher governments did.
To be sure, New Labour's constitutional commitments contrast sharply with its approach to governance. Its workfare state comes straight out of the old Fabian stable of top-down social engineering. It rests on the premise that government at the centre not only can, but should remake society to fit an a priori grand design. To succeed, the policies that emanate from it will have to be pushed through with as much centralist zeal as the Thatcherites displayed 15 years ago. Beneath the new regime's inclusive style and hegemonic ambitions it is not difficult to detect a propensity for arm twisting and heresy hunting. Alastair Campbell makes Bernard Ingham look, in retrospect, like a relaxed and cuddly champion of journalistic diversity. The Prussian discipline which Blair and his associates have imposed on the parliamentary Labour party exceeds anything attempted by the Conservatives. Blair himself is as adept in the exercise of power as Thatcher was, as convinced that he has a direct line to the hearts of the British people and as determined to ensure that the channels of communication between the people and their elective dictator are not clogged up by ambitious cabinet colleagues or recalcitrant intermediate institutions.
But that merely underlines the paradox in New Labour's constitutional programme. Before the election I feared that its reforming zeal might fade away once New Labour bottoms were safely ensconced on the Treasury bench in the House of Commons. I now think I was wrong. I also think the implications of the government's constitutional agenda go further than most commentators have realised. The combination of devolution for Scotland, Wales and Northern Ireland, elected mayors, domestication of the European Convention on Human Rights, freedom of information, House of Lords reform and a referendum on proportional representation points the way towards a profound transformation of the British state. More important still, the process of constitutional change will almost certainly generate a dynamic of its own, carrying the transformation further than its authors intended or expected.
This is true in several areas. At present, the government's approach to House of Lords reform is defiantly minimalist. The voting rights of the hereditary peers are to go and the House of Lords is to become the biggest quango in the land. I do not believe that it will stick. Once the reform genie is out of the bottle, justifying itself-as it is bound to do-with a rhetoric of democracy, meritocracy and fairness, the proposition that a second chamber of placemen is a significant improvement on the present one will be laughed out of court. With the hereditaries under sentence of execution, the Conservatives have nothing to lose and a great deal to gain by outbidding the government in the reform stakes. If they have any sense-and it is a mistake to assume that they are bound never to have any sense-they will argue for an elected second chamber. Even if they don't, others will. Sooner or later debate will focus, not on the trivial question of what to do with the House of Lords, but on the profound questions of what bicameralism is for and what sort of bicameralism Britain ought to espouse. No matter how these questions are answered, the end result is bound to be a more legitimate second chamber, better placed to contest the authority of the House of Commons and to resist the party that controls it.
The long-term implications of devolution are much more radical. The home-rule tide that swept through Scotland in the 1980s was uniquely Scottish. (As the devolution referendums showed, Wales saw nothing comparable.) But for Scotland's extraordinary experience as a historic nation, with distinct national institutions, in an essentially unitary state, nothing of the sort would have happened. Yet the forces that set the tide in motion had something in common with the forces that destroyed the Conservative party in the de-industrialised cities of the north of England. Like Liverpool, Manchester, Leeds, Sheffield and Newcastle, Scotland saw Thatcher as an enemy and Thatcherism as an alien scourge. The Scots rallied to home rule because their history had made it an obvious (and attractive) alternative to the status quo. But the reason they wanted a rallying cry was that the Thatcherites seemed bent on uprooting the collectivist economic culture they shared with the old industrial regions of England.
No one can tell what the Scots will make of home rule when they get it. What is certain is that, once a Scottish parliament exists, there will be an alter-native power centre in Britain, speaking for an increasingly self-confident nation, with a political culture and moral economy that now diverge sharply from those of Thatcherised middle England, where New Labour made its biggest gains. It is whistling in the wind to expect the Edinburgh government to be an obedient clone of the London one, even if they both belong to the same party. Tension-even conflict-between them is inevitable. London ministers, used to waving the big stick of Westminster absolutism, will have to negotiate with a lower tier of government, as ministers do in federal systems. It can safely be assumed that they and their officials will find the experience unwelcome.
This is only the beginning of the story. In the 1980s home rule did not seem an obvious alternative to the north of England: that is why there was no Northumbrian Claim of Right or Yorkshire Constitutional Convention. Once the demonstration effect of the Scottish parliament begins to bite, however, attitudes in the north of England are likely to change. When Newcastle sees a Scottish parliament sitting in Edinburgh-when it realises that a Scottish chief minister is dealing directly with the Brussels commission, cosying up to the German L?nder and lobbying potential Japanese investors with an authority unmatched by any sub-national politician south of the border-it may well decide that it deserves an assembly too. And if devolution leaks southwards into the north of England, as I suspect it will, there will be still more alternative power centres, challenging the hegemony of the metropolis and articulating values at odds with metropolitan economic orthodoxy.
Electoral reform is also likely to put some disruptive cats among the New Labour pigeons. It is a truism that the iron cage of the first-past-the-post electoral system forces parties that aspire to govern towards the centre ground. Politicians who forget that-the Bennite left in the early 1980s; the Tory Eurosceptics in the last parliament-pay a heavy price. New Labour is itself a product of the iron cage. The one unanswerable argument of the Labour modernisers was that they offered the only passport to victory. But once the cage disappears, the party game is played by different rules. Not only are minority parties fairly represented; much more important, the pressures of electoral competition no longer squeeze out dissenting views. That is why the social democratic parties of France, Italy and Germany all have to deal with minority, but significant, parties on their left-with communists of varying kinds in France and Italy, and with the Greens in Germany-inhibiting their own freedom of action in doing so.
It is, of course, impossible to tell how proportional representation would affect the British party system. The one certainty is that there is a sizeable collectivist constituency in this country, to the left of the Blairite Labour party, which still clings to the social democratic values that Labour used to embody, and which no one now represents. I can't believe that it will remain unrepresented if and when the electoral system becomes proportional. The political space that New Labour vacated in its rush to the middle ground will surely be reoccupied-perhaps by the Liberal Democrats, who are already edging towards it, perhaps by a souped-up Green party, perhaps by a breakaway socialist party of some kind. Even if I am wrong about this, there is no doubt that PR would loosen up the system. In doing so, it would bring minority tendencies in from the cold, propel British politicians towards a politics of pluralism, negotiation and coalition building and make single-party hegemony on the Thatcher model unfeasible. Blair therefore faces a dilemma to which there is no resolution. He has the sense to see that, if he is to turn New Labour's temporary success into permanent hegemony, he needs to keep the Liberal Democrats on board. But he can keep them on board only by offering them PR. And if they get PR, permanent New Labour hegemony will be impossible.
the implications of all this are startling. The Blairites' right hand seems not to know-dares not find out-what its left hand is doing. The Thatcher paradox-liberal economics combined with Tory politics-has been followed by the Blair paradox: economic continuity combined with political discontinuity. That second paradox, I believe, holds the key to the mysteries that still envelop the new regime. Its origins lie in the confusions and contradictions of the Thatcher years. In the name of economic liberalism, the Thatcher governments made war on traditional institutions and traditional elites. The victims of the Thatcher blitzkrieg included, not only such bastions of traditional Labourism as trade unions and local authorities, but the elite universities, the BBC, the noblesse oblige Tory grandees, the bench of bishops, the higher ranks of the civil service-all the interlocking networks that made up the old establishment. But, as I have pointed out, the war was waged by and through the traditional, incorrigibly elitist institutions of the central state. And in waging it, those same institutions undermined the conditions for their own existence. The combination of free-market wine and ancien regime bottles was unsustainable. The bottles blew up.
It is not difficult to see why. The state-imposed marketisation of the Thatcherites was a contradiction in terms. As Tory traditionalists have always known, the strong state of the ancien regime drew its strength from memories and rituals rooted in history and embedded in a dense network of institutions. The values that nurtured it were hierarchical, not popular; the authority on which it relied was sacral, not secular. But, as Marx saw long ago, free-market capitalism is quintessentially populist and inherently subversive of traditions and rituals. It scorns history, hollows out institutions and undermines hierarchies: in the marketplace the customer is king and Jack's pound is as good as his master's. And so the capitalist renaissance which the Thatcherites helped to instigate destroyed the moral foundations of the institutions through which they had done so-and this made it increasingly difficult for them to mobilise consent for the remains of their project.
The Blair government is the legatee of this process of institutional and cultural evisceration. By May 1997, the ancien regime was in disarray. The fundamental doctrine of absolute parliamentary sovereignty was under threat-from Brussels, from Strasbourg, from Luxembourg, from uppity judges at home. The only slightly less fundamental doctrine of ministerial responsibility had been effectively nullified, as ministers made it possible for themselves to pass the buck for unpopular decisions to unaccountable agencies at arm's length from Whitehall. So, too, had the accompanying assumption, dating from the Northcote-Trevelyan reforms of the 19th century, that responsible ministers were to be sustained by a disinterested, professional civil service without ideological affiliations. The complex understandings and practices that had shaped the relationship between central and local government had been trampled on. Public support for the system was waning steadily as accusations of sleaze in high places reached fever pitch.
On a deeper level, the essentially imperial structure of status, authority and consent which had carried the ancien regime through two world wars, the coming of democracy and the installation of the welfare state had crumbled along with the empire itself. An Eton education, even a First in Greats, had become something to apologise for. Monarchy-baiting had become one of the favourite sports of an awesomely vulgar tabloid press. Julian Critchley's garagistes had taken over the Tory party; expensively educated mandarins ranked lower in the status hierarchy than uncouth utility chiefs; Barings was brought down by a thrusting young Cockney without a university degree. Britain had at last experienced the long-awaited, long-delayed bourgeois revolution. It had become a land fit for Richard Branson.
Politically and socially, there was no going back. Embourgeoisement was irreversible; and the new bourgeois Britain could be governed successfully only through a bourgeois state. The ancien regime could not be put together again. The only way to stem the drain of legitimacy which had helped to undo the Thatcherites was to reconstruct the state on lines appropriate to a modest, post-imperial, late 20th century European country of the second rank. This is what Blair and his colleagues are now doing: this is what they have to do if they are to root the state which they aspire to govern in popular consent. I am not sure that they have grasped the inner meaning of their constitutional agenda. Before the election, they often gave the impression that they saw it only as a sop for disaffected left-wing intellectuals. But their intentions scarcely matter. What matters is that the gap between the society and the state can be closed in no other way. Like the Thatcher paradox before it, the Blair paradox is inherent in the historical conjuncture that brought the government to power.
There is a comparable paradox in Blair's christian democratic inclusiveness. Like Thatcher before him, he has managed-at least for the time being-to redraw the map of British electoral politics. Like her, he has done so by detaching crucial elements from his predecessor's constituency and annexing them to his own. The Thatcher coalition that dominated British politics in the 1980s and disintegrated in the 1990s has been replaced by a Blair coalition. The two coalitions have important features in common. Each was assembled by a politician of genius, with a capacity to reach out, across familiar ideological boundaries, to the core constituency of the opposing party. Both the politicians concerned were curiously rootless figures, cut off-in one case by gender and in the other by upbringing-from the cultures of their respective parties. Above all, each coalition owed as much to a revulsion from old attachments as to the attractions of new ones.
This was most obviously true of the Thatcher coalition. The once Labour C1s and C2s who swung to the Conservatives in the late 1970s and early 1980s were fortified in their new allegiance by the actions-and by the words-of the Thatcher governments. But they adopted it in the first place because Labour's lurch to the left drove them away from their old allegiance. Thatcher was merely the midwife for Essex man: the progenitor was Tony Benn. The story of the Blair coalition is slightly more complicated, but the essentials are not very different. The Europhobic right was to the Conservatives what the Bennite left had been to Labour. It turned the party in on itself and cut it off from the wider society. Above all, it drove a wedge through the heart of the Conservative coalition. In doing so, it created a sleeping New Labour constituency which Tony Blair proceeded to kiss awake.
Europhobia was meat and drink to the garagistes who increasingly dominated the Conservative party conference and constituency associations. They were anti-foreigner, anti-regulation and anti-union. Above all, they were anti-Brussels-the epitome of foreignness and a nest of regulatory union lovers. They had an inexhaustible appetite for Europhobic rhetoric, but each new dose of it had to be stronger than the last to produce the desired effect. The result was a process of oratorical escalation, through which the Conservative party speechified itself into outright hostility to the basic principles on which the EU was based. To serious money and serious business, however, all this was anathema. The executives of internationally competitive companies, significantly engaged in the global marketplace, the managers of investment funds and the bureaucrats of the CBI were mostly appalled by the prospect of British self-exclusion from the EU, and they could see that the logic of Conservative Europhobia pointed inexorably in that direction. Old Labour, with its union ties and its redistributive rhetoric, could never have seduced them, but once Blair made it clear that New Labour was sound on market forces, personal taxation and trade union power, many of them were only too happy to enrol under his capacious banner.
All this procured an extraordinary socio-political realignment. For the first time since Gladstone's Liberal party split over home rule, the Conservatives are no longer the party of big business. For the moment at least, the New Labour coalition extends right across the social spectrum from the dispossessed of the inner cities to the corporate elite-from Diane Abbott to David Sainsbury; from David Blunkett's constituency of Sheffield Brightside to Gisela Stuart's Edgbaston. And at this point the parallel between the Blair and Thatcher coalitions breaks down. In its triumphant heyday, the Thatcher coalition was held together both by ideology and by interest. The New Right themes of choice, enterprise and individuality spoke at least as loudly to aspirant former Labour voters as to traditional Conservatives. Privatisation, deregulation and cuts in direct taxes did as much for their pockets. None of this is true of New Labour's coalition. Despite the talk of a third way, it has not yet acquired a distinctive ideology, and it is divided by a sharp gulf of interest.
The central fault line in modern post-industrial society is that between the winners and the losers in the global marketplace. The lion's share of the extraordinary productivity gains associated with the current capitalist renaissance has gone to the owners of capital, to a new techno-managerial elite and to a handful of stars in the increasingly global entertainment industries. These are the winners: the new lords of creation. They are increasingly detached from community and nation, and increasingly unwilling to pay their share of the social costs which the new capitalism has brought in its train. They want to hang on to their winnings, and they also want to maintain a global economic system in which they can win even more. Confronting them are the losers: the anxious middle classes, threatened by proletarianisation; the increasingly casualised working class; and the burgeoning underclass. That fault line runs through the New Labour coalition. As the story of the Clinton administration shows, well-intentioned populism cannot bridge it.
No project for social inclusion will work unless it captures some of the winners' gains and redirects them to the losers. The notion implicit in the last budget that the workfare state can turn the trick all by itself, that a mixture of training, education and moral suasion can transform the entire society into winners, and that this can be done at nil cost to those who have already won, is an illusion. The losers cannot be wished or chivvied out of existence; as all the great capitalist apologists have known, losing is as much a part of capitalism as winning. By the same token, the losers' interests are bound to differ from those of the winners, and it is self-deception to pretend otherwise. But the political and ideological pressures that foster this particular kind of self-deception are stronger than I can remember. Almost by definition, the winners and their apologists in the media, the think-tanks and the business schools are better organised, more powerful and more self-confident than the losers. Above all, they are more in tune with the orthodoxy of the times. And thanks to Tony Blair's success as a coalition-builder, the government is even more sensitive to these pressures than it would have been in any case.
Yet it would be wrong to end on a sour note. Last May's magic has not yet worn off. The government can draw on an enormous fund of goodwill. It has more room for manoeuvre than it appears to realise, more options than it is willing to acknowledge. Sooner or later, it will have to resolve the paradoxes that face it, but it can do so in a variety of ways. No iron law prevents it from accepting the pluralistic implications of its constitutional programme, the solidaristic implications of its Europeanism or the redistributive implications of its commitment to social inclusion. For those who cherish the core social democratic values of justice, freedom and solidarity there is everything to play for.
