Winner of the New Statesman SPERI Prize in Political Economy 2016

Saturday 10 March 2018

The three mistakes of centrism

Paul Krugman quite rightly often complains about people he calls professional centrists, who always suggest there is a middle road between the ‘extreme’ views of Democrats or Republicans. He noted that such centrists always have to blame both sides, and would typically fail to note that although the Democrats have stayed pretty much in the centre of politics, the Republicans have been gradually moving further right.

Centrists of this type were quite rightly attacked during the height of austerity, because milder cuts were not the answer. In the UK the right answer was to have no cuts until the recovery was secure and interest rates were clear of their lower bound. The centrists at the time in the UK were the Labour party (too far, too fast) and that compromise policy not only missed the point but was also unpopular because it satisfied no one. It certainly didn’t satisfy Labour party members, which is why Labour are now led by Corbyn.

But doesn’t Corbyn’s victory mean that the UK today needs centrists, because we have not just got a Conservative government which has morphed into UKIP but also an opposition led by the hard left. Here is Philip Stephens attacking the Labour leadership peddling snake oil populism of the left variety. If you search my blog you will see that I normally think Stephens gets things right, but I think there are three major problems with this diagnosis of where we are.

The first mistake is a variety of the failure I talked about above, which is to fail to see how the political landscape has changed. Here is the first paragraph from Stephens' article.
“John McDonnell has a plan. The Labour party’s would-be chancellor prefers Marx to markets. So he intends to nationalise the energy, water and railway industries, impose big tax rises on businesses and wealthy individuals, shackle the banks, and pump up public spending and borrowing. The organising goal, he told the Financial Times in a revealing interview, is “an irreversible shift in the balance of power and wealth in favour of working people”.”

If you think this is damning stuff, look at the detail. Nationalisation - just returning some industries to public ownership, much as they are in many European countries. Taxes on business - just reversing cuts to corporation tax made by George Osborne since 2011. Higher taxes on the wealthy will only begin to reverse inequality at the top that began growing in the 80s. Shackle the banks? - about time too. Pump up spending and borrowing - in reality just borrowing to invest, with current spending held by a fiscal rule which, outwith a liquidity trap recession, is not very different from the rule of the Coalition government of 2010. The killer line about an irreversible shift in power - from Harold Wilson’s 1974 manifesto (HT George Eaton).

So Stephens is wrong to say this is another 1983 suicide note. McDonnell might prefer Marx to markets, but Labour’s 2017 manifesto gives us a world that if it had been proposed to Harold Wilson he would have thrown it out as involving too much privatisation and too many tax cuts for the rich. Labour’s manifesto is just a modest reversal of some of the things that have happened since Thatcher introduced us to neoliberalism.

But why wasn’t the 2017 manifesto like 1983, given the current Labour leadership? The answer leads us to the second mistake many centrists make: to imagine that any leader from the hard left can impose their will on a soft left parliamentary party. Stephens mentions this, but it is far more central than he suggests. Labour will be extremely lucky to get an overall majority at the next election, and even if they do there are plenty of MPs that will happily vote against their government the moment that Corbyn and McDonnell overstep the centre left mark. Give them 20 years and it is possible to imagine that they might be able to create a PLP more in their image, but they do not have 20 years and those who follow will be from a different generation with different reference points.

There is a third mistake which is in some ways the most important. I cannot beat Anthony Barnett’s way of expressing it: if all you want to do is stop Brexit and Trump and go back to what you regard as normal, you miss that what was normal led to Brexit and Trump. It all goes back to austerity. Even if you like aspects of neoliberalism, as centrists surely do, what happened with austerity and the scapegoating of immigrants is what I describe as neoliberal overreach. It was overreach not just because it was wrong and immensely destructive, but it laid the grounds for Brexit.

None of that happened by accident. Austerity might, just possibly, have started as pure political opportunism, but the fact that it was sustained despite all the harm it was doing suggests a deep malaise on the political right. No one can doubt this following Brexit. A party that can produce Prime Ministers as incompetent as first Cameron and then May, and can pursue without any real revolt a hard Brexit policy, is seriously sick and needs a long period of intensive care. The kind of care that you can only get with many years in opposition.

But that is only half the story of why Brexit happened. The other half is obvious, yet so many centrists seem to wish to ignore it. Brexit was brought to us by a right wing press that has become a propaganda vehicle for a few wealthy press barons. Britain has become a worse country because of this right wing press, which when it is not demonizing the EU and Remainers it is doing the same to immigrants and those it calls scroungers. It should be no surprise that newspapers that can show so little regard for truth and humanity would give us something like Brexit, and they will go on giving unless something changes.

A government of centrists will only take us back to where we were before all this kicked off in 2010. We need to do better than go back to the normal that gave us austerity and Brexit. We need a radical government that can begin the process of reforming our economy so that it works for all working people, that can tackle extreme inequality at the top and reform the press so that it is not a mouthpiece for a wealthy few. A government led from the left are our only real hope of achieving that. Centrists will be an important voice during that government, but they must not stop us ensuring the likes of austerity and Brexit will not happen again.


  1. 1. The reason Labour is now led by Corbyn is because Labour lost the 2015 election and the members decided they may as well be hanged for a sheep as a goat: no more compromise with the electorate. Labour would have still lost in 2015 if it had had a more radical anti-austerity programme, and the economic policy in the 2017 manifesto was indistinguishable from Balls' 2015 one, save for the cognescenti.

    2. You completely misunderstand the ability of the PLP to control Corbyn/McDonnell once in government. Governments need hardly any primary legislation to govern: basically Finance Bills and that is it. As the PLP won't be voting down a McDonnell Finance Bill, they won't be controlling the economic or foreign policy of the UK. Corbyn and McDonnell will. If you're comfrotable with that, fine, but don't tell me fairy stories about how Yvette Cooper will be able to exercise much influence. The manifesto is just concerned with not scaring the horses, as with all governments it won't have much relation to what happens subsequently.

    3. If you only have a hammer, everything looks like a nail. You have one good point: the UK should (and should have) used expansionary fiscal policy at the zlb and trying to run a lower deficit in such circumstances was a mistake (unless your motive was to use it as a shield to shrink the State, which was indeed what Osborne wanted). Not everything in UK politics is reducible to this one good point.

    1. So all those new members, £3ers, and rally attendants were enthused by the possibility of the Labour party being hung for a sheep as a goat? I don't think so. More likely: the Labour leaning vote having had enough of right-wing ignorance and bigotry being utilised in support of the same old initiatives, the same old damaging policies, indeed the same old hammer raining down on the same old groups, decided to join in and lend a hand with the promise. You know, the change thing.... That's why Labour is led by Corbyn.

    2. 1. Conjecture.

      2. A truth, obscured with nonsense. It's not the PLP but Labour councillors, Momentum MPs, and ordinary members who will constrain Corbyn. Jeremy rose to power from a bottom-up campaign, and that's what will limit (and strengthen) his administration.

      3. I see at least 3+ good points in SWL's piece. Perhaps you think the Daily Mail is a model of sound, public interest, factual journalism? Or that a Conservative party not even the Institute of Directors support is a party in rude health?

    3. Today, Corbyn's response to a foreign government carrying out assassinations with a nerve agent in the UK shows the astonishing complacency of thinking that a government led by him would be controlled by the PLP.

      Yet again, you're guilty of both wishful thinking, and assuming that your enemy's enemy is your friend.

  2. My definition of centrism is not policy based, it’s an acknowledgement that not all people have the same priorities and goals. Centrism rejects the fundamentalism of one true way, on either left or right. To attack Centrism risks division and abandon compromise.

    The failure of Centrism has been one of policy not purpose. A lack of imagination and disconnect from the real world through isolation and lack of diverse thinking at the top.

    1. Social democracy, which is Corbyn's stated position, is a left position that accepts compromise. "Centrism" isn't synonymous with democracy, and indeed has only been associated it since the massive expansion of neoliberalism since the end of the cold war.

  3. Brexit, Trump and now Italy is a rejection of mainstream economics.

    History will show how supply side monetarism is judged and it won't be pretty.

    It takes years to move from a false orthodox and this is just the beginning of that move.

    1. Brexit, Trump, and Italy had nothing to do with rejecting mainstream economics. They won because of xenophobia, full stop.

    2. I've spoke to a lot of people about Brexit and none of them said they wanted to leave the EU because they didn't believe in supply-side monetarism.

      I would say that both Brexit and Trump were there to be won by the pro-EU side and the Democrats respectively but both contrived to lose. They lost for easily fixable reasons, in the EU case not giving the UK a concession on Free Movement, and in the USA failing to give the electorate in mid-west states a compelling reason to vote Democrat. Both relatively small reasons, but little things say a lot, and key elements of the electorate heard the messages about their place in the hierarchy loud and clear.

    3. I disagree about free movement, the EU would not have conceded that, which would need unanimous treaty changes. Not easily fixable. Especially since immigration is controversial on the continent too and the governments would not want to give the Brits an opt-out that their own constituents don't enjoy.

  4. ...there are plenty of MPs that will happily vote against their government the moment that Corbyn and McDonnell overstep the centre left mark.

    Aren't you therefore agreeing with those on the left who want to push for mandatory reselection of MP's, to avoid exactly this.

  5. "We need a radical government that can begin the process of reforming our economy so that it works for all working people, that can tackle extreme inequality at the top and reform the press so that it is not a mouthpiece for a wealthy few. A government led from the left are our only real hope of achieving that."

    My question is how can the press be reformed not to be a mouthpiece for the rich and being so toxic?

  6. Simon,

    I'm not sure "centrism" is the way to see it, really. The issue for me is that the 2017 Manifesto (which I supported only because I live in Wales, and like the Welsh Labour Party a lot) was pure populism. Your fiscal rule was an excellent start, but do you believe it'll really be stuck to?

    I haven't seen any experts setting policy lately.

  7. One thing that is very important that you and Labour understand, and I think Corbyn certainly does, was that it was more than austerity that led to Brexit and discontent with neo-liberalism. Austerity is merely a convenient scapegoat for many who do not want to change things too much and go back to running macro-policy as if it was just a technical operation that involves adjusting interest rates. The problems were building up well before the implementation of austerity and are much more fundamental (Piketty for example I think understands a little bit about what they really are.)

    This stuff about scapegoating immigrants is also talk that patronises the general public by a few that do not really want to try and understand what the social consequences of liberal labour movements might have really been.

    Brown's defeat and Brexit were both decisive verdicts by the general public on what they thought of a wide-range of policy implemented since Thatcher and including Blair/Brown and David Cameron. It is very important the lessons are learned. Unfortunately I do not think we have the intellectual leadership - particularly in economics- to guide political leaders to really deliver on the public's wish, which wants new ideas and a fundamental change of direction.


  8. Excellent article. Where we are now, has been planned for 40 years. Without a genuine desire for a civil society, we will simply continue to flirt between centre right and Hard right. The propaganda of the right wing press has been ramped up to the point at which we get "sabateurs" and "traitors" thrown at people who simply disagree. A rebalance is rquired.

  9. Agreed Simon.... DontD always agree but you're spot on the money.

  10. Excellent and thought provoking blog post Simon. Thanks.

    I agree wholeheartedly that the right-wing press are fundamentally complicit in engineering the current debacle. Just one question: given that Leveson2 looks like it will sink without trace how would you "reform the press so that it is not a mouthpiece for a wealthy few" without being accused of censorship or government control. I know the usual suspects will accuse you of that whatever you suggest but how do we get those who want a free but 'responsible' press on board. How do you make "Change is coming" non threatening to ordinary citizens?

  11. Labour’s 2017 manifesto gives us a world that if it had been proposed to Harold Wilson he would have thrown it out as involving too much privatisation and too many tax cuts for the rich.

    Yes. If anyone starts invoking that 1983 manifesto, I like to point out that the 1983 SDP manifesto proposed halting all further privatisations after oil and telecomms - so no private coal or steel, no privatised utilities or transport, and certainly no stealth-privatisation of education or health. In 1983 terms Corbyn and McDonnell are, if anything, right of centre.

    Your second point is well-taken, too. It's true that the party has moved a long way to the Left in a short time; it's also true that where the party has ended up on most policy areas is right in the Old Labour mainstream. Corbyn advocated far more left-wing policies in his backbench days and probably still believes in them now, but he's enough of a politician to know that you work with what you've got.

    Hugo - how do you explain the electorate's apparent preference for not being compromised with?

  12. It rather disappointing that respected journalists, like Philip Stephen (PS) of the FT, seems to feel it necessary or appropriate to express animated fear that JMcD - if given the opportunity by a gullible electorate, taken in his superficial adoption of friendly old-fashioned bank manager pose - will then take the opportunity proceed to wreak unquantifiable damage on the economy, as he ruthlessly proceeds to dismantle capitalism, regardless of the consequences.

    Surely JWL is right in so much that such near-hysteria is a symptom of how the parameters of accepted mainstream political analysis has narrowed since the eighties to the consideration of alternative models of the management of neo-liberalism to the detriment of the majority of the population.

    Labour's 2017 core manifesto policies to re-nationalise utilities and the railways, to impose higher taxes on the corporate sector and on the highest paid, and to further reform the banking sector, is hardly off-the-scale stuff.

    It is time indeed that the pendulum swings back towards ordinary working people, whether by hand or brain, for many of the reasons that PS himself actually defines or concedes in his FT article, including,the fact that the incomes of most Britons have stagnated or fallen for over a decade while the incomes of FTSE 100 chief executives have quadrupled, that the industries that Mr McDonnell wants to nationalise are now run by 'avaricious, rent-seeking oligopolies', that tax and spending policies pursued by the last two Conservative-led governments have rigged the system in favour of the affluent elderly by loading debt on to students and cutting services for young families, while the bankers who caused the crash are as grossly overpaid as they have ever been: a pretty over-powering case for radical reform, if there ever was.

    Certainly, as south London suffers from prolonged water shortages caused by under-investment linked to excess profiteering by a privatised utility, the notion of re-nationalising such utilities appears eminently sensible: at least if effectively and efficiently planned and executed.

    The real issue is whether a Corbyn-McDonnell Labour government actually could achieve such a shift of power and opportunity in favour of the majority.

    That, paradoxically, will require some strategic pragmatism that could also require populism to be backstaged. One example would be the precise detail of the sequencing, funding, and organisation of any such future re-nationalisation programme.

    At another level, one risk is that Labour could be too pragmatic, as suggested by their open-ended manifesto commitment to continue a poorly targeted Help-to-Buy programme: a clear example of reversion to Blairite triangulation. That example of 'bad' pragmatism reflects a quite discernible danger that untargeted sops to young people, certain categories of professionals, and other groups - identified by polling as potentially sympathetic to Labour in the conjuncture of political circumstances that is current at the time - motivated by the pursuit and the maintenance of electoral popularity, will trump strategic and sustainable political advance.

    In short, a back-to the-future New Labour focus again on presentation rather than substance: the beloved Jeremy appearing at Glastonbury as the Tribune of the People taking the mantle of Tony Blair as the personification of Cool Britannia. Think about it!

    Analysis and informed objective criticism is required, not polemical 'marxist' name-calling. Informed and influential journalists, such as PS, should be joining forces with outward-looking real-world,but data-led economists, such as JRW, to challenge - and even assist McDonnell in terms of the detail and rationality of his proposals, in conformity with the twin and mutually supporting demands of economic efficiency and social fairness. A tough task that won't win many awards!

    1. Good comment.

      I'm pleased McDonnell has taken an interest in worker ownership which I think is what's needed across the board to get rid of the division between workers (of all kinds, as you say) and the shareholding class (which they overlap with, due to the highest paid).

      Nationalisation may be OK in some cases to make services run better, but it's less clear how it helps the workers as such. Higher taxes on the rich may survive for so long, but they will always regroup and fight back eventually, Thatcherism style.

  13. 'It all goes back to austerity.'


    Austerity split the former left electoral coalition between middle class liberals and the working class, and at the margin defecting working class voters were critical in delivering victory to Trump and Brexit.

    At the margin.

    But the former right coalition between metropolitan business oriented internationalists and the nativist suburban and rural/Red State middle classes was split much earlier not by austerity but by prosperity, and it is those suburban and rural middle classes that are the core of Trump and Brexit.

    Specifically these erstwhile footsoldiers of Reagan and Thatcher from the late 1980s onwards found, to their great resentment, that the reforms of the 1980s gave rise to a thriving liberal metropolitan culture that left them not poor in absolute terms - many are much more property rich than younger metropolitans, for example - but threatened their RELATIVE status in the social and cultural and economic national pecking order.

    Accustomed to thinking themselves the heart of middle American and middle England (especially England), not at the top but with a stable middle status, they found that all under threat as their young left for the cities and the cities raced ahead building culturally different liberal metropolises whose social and cultural mores became more and more threatening to those left behind.

    Understand this and you understand what happened to the Republicans and Tories from the late 80s onwards, the resentment towards feminism, multiculturalism, 'political correctness', immigration (natch), environmentalism, London, New York, San Francisco, Hollywood, etc., long before the 2008 crisis, and the appeal of 'take back control', 'we want our country back', and anti-elitist - meaning, really, anti-metropolitan - rhetoric.

    In the UK never mind Brexit - it was all there to see and hear in the Countryside Alliance marches - ostensibly about fox hunting - that greeted the election of the metropolitan Blair government......

    1. Great comment. Even if I am not in complete agreement - I think there have been some legitimate concerns about immigration (particularly relating to economic migration rather than refugees), for example.

      Philosophically neo-liberalism (including neo-classical economics) assumes absolute gains as being important. But what often concerns people is their relative positions. My own view is that, as long as there is a feeling of solidarity among the population, these aspects of human nature become less important. I think what we are seeing is an ever greater severance of the elite and low income groups, and a disappearing middle class.


  14. Centrism is easily gamed by moving the extremes and thus moving the middle. Here's an old academic paper on that.

  15. Centrist is a pretty miserable term for someone to apply to their own political philosophy.Apart from anything else, if it means anything, it depends on the position of extremists of left and right and I see no reason why one should allow oneself to be defined by them.

    The only value it has it to suggest a need to avoid those extremes and the intolerance that often goes with them.At the minute the political mood is dominated by fear and uncertainty so extremes often have an appeal. The main winner is nationalism with its cake and eat it philosophy of legal "independence" and practical interdependence (they keep quiet about that bit and just assume they have the right for it to continue).

    Rather than try to promote a moderation which does not hold immediate appeal and which may actually be fruitless(as Theresa May ought to know you cannot compromise with the Brexiteers or Trump) we really have to tackle the false god of national "independence" and the mythology that sustains it.

    That actually leads to the need for compromise because international cooperation by its nature requires that. It may be that this perspective is the really fundamental political divide of our time.


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