Never let a good crisis go to waste," insists Rahm Emmanuel, the hardbitten chief of staff to Barack Obama. Certainly, economic disaster and political disequilibrium create the space for new thinking. They make and break reputations too.
Gordon Brown is trying to bring the British economy down gently. A little like the passengers of Flight 1549 approaching the waters of the Hudson, voters are anxiously wondering if the captain can land safely. In private, even senior government figures now admit that Britain's economy may shrink by 4 per cent in 2009—a downturn twice as deep as official projections. Latest polls, at least, suggest that faith in the pilot is waning.
As a result Labour circles are full, once again, of post-Brown political chatter. There will be no challenge before the election, of course. But the contours of the debate that will engage Labour in opposition are already becoming visible. It's a dividing line that fractures the other parties too. On the one side stand those for whom the economic crisis demonstrates the need for a more muscular state; on the other, a diverse group who want to use the state to give more power to individuals.
The big-statists currently have the upper hand, and understandably so. The government is bailing out banks, car firms, homeowners and charities. It is likely, fairly soon, to start buying its own debt with its own money, printed just for the job. In the face of a damaging combination of a smashed credit system and downswing in the economic cycle, the image of a strong, benevolent state—there to ward off all dangers—is attractive to politicians and voters alike. A new corporatism is being hailed.
Ed Miliband, a rising star and a leader on this side of the divide, has already declared that "the line between the state and the market has been redrawn" claiming that the banking crisis will have an impact on domestic policy comparable to the effect of 9/11 on foreign affairs. For him, the new leviathan rising from the ashes of 2008 is intended to protect us not from the brutishness of each other, but from the brutishness of the free market.
But in recent weeks an eclectic group of Labour ministers, progressively-minded Conservatives and Liberal Democrat top brass have separately been exploring an alternative response—not beefing up the state, but using its weight to give power to people themselves. Nick Clegg, a leader who is proving better than his party, spoke to the IPPR in February, lauding "the raucous, unpredictable potential of people to do the right thing for themselves, their families, their communities—as long as they're entrusted to do so."
For Labour, Liam Byrne, the clever cabinet office minister, gave an equally ambitious speech seven days earlier. He sent a shot across the bows of others in his own party, warning against "mixing up an argument for strong government with an argument for inexorable growth of the state." He went on: "our mantra should be really simple. We want a country of powerful people." (This speech certainly caught the eye of team Cameron, who know a dangerous adversary when they see one.)
Public service reform has, in recent years, provided terrain for early skirmishes between these two tribes. The power-dispersers won a small victory recently; trials of a plan to give long-term NHS patients their own budgets to buy care have begun. The trials were launched "with a view to" rolling them out nationally: those critical four words were hard-won.
But the division will soon be visible in a battle looming over an issue long characterised by dull unanimity: free trade. Now those old certainties are being abandoned. President Obama has even inserted "Buy American" clauses into his $787bn stimulus package, pushed though both houses of congress last month.
Gordon Brown still argues the benefits of trade, no longer a popular stance. In the good times, the hurts caused by international competition are washed away by the benefits. But in a shrinking economy, they leave a bruise, as protests about foreign workers at the Lindsey oil refinery show. This debate is set to intensify. Big-statists will lean towards light protectionism and subsidies to industry (Peter Mandelson, unusually, is showing statist tendencies here). The power dispersers will tend to support free trade, but balanced by retraining and cash to help those affected to get back on their feet.
How this contest turns out depends on Brown himself. There is a growing fear, even among loyal ministers, that Brown is too comfortable in his new role, pulling every lever of the state in the hope of averting catastrophe. If he succeeds, the case for a new Leviathan will be strengthened. If he fails, as seems likely, the power-dispersers will gain the upper hand, regardless of which party is in power. Either way, Gordon Brown's premiership will leave its mark.
