Turning the page on neoliberalism? To what?

On 19 March 2024, Rachel Reeves, Labour's shadow chancellor, gave the Mais Lecture at the Bayes business school.

Some reports said Reeves was going to praise the policies of Margaret Thatcher. In fact she didn't. Reeves said of Thatcher’s policies “The outcome was an unprecedented surge in inequality between places and people which endures today [and] the decline or disappearance of whole industries, leaving enduring social and economic costs and hollowing out our industrial strength.”

Reeves also distanced herself somewhat from New Labour. She said New Labour's analysis was too narrow and failed to see the downsides of unregulated finance, globalisation and insecure work. She criticised Tory and Lib-Dem austerity after 2010 as doing severe damage to the social fabric and public services.

In fact she said the economic consensus that has dominated the last 40 years or more had collapsed, and inequality and instability are stoking tensions and strengthening the radical right across the globe. 

However, her response to the 40 years of growing inequality was extremely threadbare. With the cringeworthy headline "securonomics", she declared a goal of high, stable, and sustained growth.  She sketched three policy pillars: "stability", "investment", and "reform".

"Stability" means apparently accepting one of the Tories' fiscal rules – that debt must always be projected as falling as a proportion of GDP in the fifth year ahead. This rule is arbitrary and economically illiterate. It has encouraged the Tories to say they are achieving "balance" by programming huge social cuts for years ahead (when they are not in office).

So, crumbling public services cannot be properly addressed unless Labour are willing to increase taxes on the wealthy. But Reeves commits not to increase corporation tax, and not to increase taxes on rich individuals beyond closing a few loopholes.

"Investment"? Labour has already downgraded the “green prosperity plan” from £28 billion a year. Reeves offered references to a more active state, an industrial policy, a sovereign wealth fund and various technocratic fixes to increase infrastructure investment such as consolidating defined-contribution pension schemes.

She promised no equivalent even of the USA's Inflation Reduction Act, or of levels of investment achieved in advanced industrialised nations in the 1950s-70s.

The third pillar, "reform", immediately rang alarm bells for me.

For New Labour and Tories, "reform" has meant de-regulation, privatisation, contracting-out, and reducing workers' rights.

Reeves did not actually advocate any of that. She talked about the need to decentralise the state through devolving power to regional and local government.

Yet local government has been deliberately starved of funding to the point of collapse. If Labour does not move to resource local government properly, decentralisation will be largely meaningless.

Labour talks of changing planning rules to allow housebuilding, but local authorities which want to build social housing are often too financially constrained to do it.

Reeves gave promises to improve workers’ rights along the lines of the "New Deal for Working People". “We will guarantee basic rights from day one – protection from unfair dismissal, sick pay, and parental leave', though Reeves qualified that with a commitment to keeping probation periods. The ban on zero hour contracts also seems qualified.

Reeves pledged to remove all anti-union legislation since 2010. That would still leave the Thatcher-Major era anti-union laws, which severely limit workers' rights to effectively strike and organise.

From bourgeois commentators the speech largely got a cautious welcome. Peter Mandelson cautioned against too-fast implementation of the rollback of anti-union laws, but capitalists seem content to lobby behind the scenes on that.

Some left wing commentators like James Meadway are critical of many of the measures proposed by Reeves, but saw this speech as a break from neoliberalism.

A break? Maybe, but not necessarily in a positive direction for working-class people. Keir Milburn called the speech “social democracy for corporations and austerity for the rest of the us”. Others have talked about Bidenomics without the money.

Fundamentally all of the proposals Reeves outlined are about strengthening capital and enhancing its profitability.

If there is a break with neoliberalism, it is in the view that is not best done by endless deregulation, state roll-back, or the crudest squeezing of workers.

Over the last 40 years horizons for many on the left have been lowered to being "anti neo-liberal", "anti-globalisation", or even to supporting productive" capital rather than "financial" capital.

We need to be talking about working-class socialism, not strategies for higher capitalist growth.