What makes you sure that tax credits, the minimum wage and increased spending on education didn’t achieve both (greater) economic efficiency and greater equality?

I don’t understand this opposition to “top-down managerialist policies”. A great many sensible policies are such, for example changing prices to reflect externalities (a carbon tax or subsidizing solar panels), taxing behaviour that increasing systemtic risk in banking, or a land value tax.

These type of policy are also distinct from some mythical conception of leadership.

Lots of left-wingers say they dislike New Labour, but my impression is that few of these also want to abandon policies like tax credits, the minimum wage and increased spending on education.

Also, if you actually have any concrete policies that will bring about this world in which power hierarchies are dismantled, mightn’t you need a charismatic and skilled political leader to get elected on such a manifesto?

[cross posed from S&M]

“They are (in some/many cases) not the “courageous leaders” and “wealth creators” of New Labour fiction, but charlatans and plunderers.”

A side note here:

many of the bosses were paid on the basis that they were courageous leaders and wealth creators. Conventional economics (or what right wingers claim is conventional economics) claims that wages = productivity. So if it is the case that wages = productivity then the bosses were indeed “courageous leaders and wealth creators”. However if it is the case that they were charlatans and plunderers then it clearly cannot be the case that wages =productivity – which has has a great deal of implications in all sorts of areas.

So which is it?

Planeshift

I think conventional labour economics has long since moved onto thinking about wage determination in terms of bargaining power, where firms and workers bargain over a ‘surplus’. And when it comes to people who are paid by their buddies in renumeration commitees, I don’t think even the conventionalist of conventional economists would talk in terms of a perfectly competitive market (which is where the result wage=productivity would hold). However, even thinking in terms of bargaining power still implies some link between productivity and wages.

Also, I think that if for some reason the labour market doesn’t clear, and there is unemployment, conventional economics (even without all the bargaining power stuff) just says firms will pay the minimum they need to attract workers, and if there is a surplus, they’ll keep it.

But you’re right, nobody should assume “if they get paid that much they must be worth it”

I don’t recognise New Labour in any of these criteria. These are areas where many claims were made, but the actions of New Labour in government were quite different.

The banking crisis had nothing to do with “Top-down managerialism” in government or banking. The bankers thought they couldn’t loose and the pusillanimous politicians just let them run.

Macroeconomic stability meant doing little during boom years but, as usual, claiming the credit. They were easy times and New Labour benefitted.

There was an almost complete failure of any redistributive policies according to the Gini scale.

I’m still not convinced that the upskilling talked about was sufficient or in the right areas. We’ll have to skip that one as the schemes such as new style apprenticeships didn’t really have time to be properly effective.

When inefficiencies in the public sector are suggested I’d like to know where the evidence is. Social work is harder to measure in this regard compared to making widgets. Its a bot too glib to just roll out this old tory saw.

So, what replaces New Labour? The Con Dems.

What happens to the Labour Party is a more important question.

If you look at this research presented in a fascinating format you will see some rather widely held assumptions that might not actually be true. New Labour was very keen on top-down managerialism with only limited success. However, top-down managerialism and its use of incentives only works for mechanical skills. Higher incentives for even rudimentary cognitive skills leads to worse performance. There are things in these findings for all sides. We are not just motivated by profit. However, public services and firms will work best when people have autonomy and power is taken away from the top-down managers.

http://www.youtube.com/watch?v=u6XAPnuFjJc

politics is dead in this country,but visit a website called classwar.com and i think there ideology is the way forward,a change we need and a change is coming.

@6

Reeeeeeeeeeeally? You think a poorly designed website that seems to do little but archive articles from the ’70s and ’80s anarchist demos is the future? Jesus wept.

@1 Luis Enrique: “I don’t understand this opposition to “top-down managerialist policies”. A great many sensible policies are such, for example changing prices to reflect externalities (a carbon tax or subsidizing solar panels), taxing behaviour that increasing systemtic risk in banking, or a land value tax.”

The examples that you give are ones that occur in the “private” market. If government imposes a carbon tax that impacts your transport business, you’ll look at ways to minimise that tax: reorganise your company by creating more distribution hubs, shift low value products onto rail or canal etc. Another option is to pay more carbon tax. The company runs a business for which the rules change every twelve months (get rid of mini budgets, please).

“Top-down managerialism” occurs *within* organisations. When central government (as the NHS employer) determines that the waiting time for clinical procedure X is 60 days, clinical staff cannot say to administrators “Stuff you, you should pay the failure tax because it is unrealistic to meet that target”. Professional ethics mean that clinical staff cannot leave others to to be untreated, but how do you sum the square with finite resources to meet targets?

Rules change according to the whim of managers, especially the individual who was recruited specifically for a job.

One way to sort this out is to employ staff managers rather than technocrats. If department A has a clever idea that conflicts with the ethos of department B, appoint a staff manager to resolve the problem. In non-managerialist companies, this is often a point of failure; the staff manger does not have the guts to make a choice.

The ambitious technocrat will always make a decision. “This is a great idea but we need further consideration before implementation.”

Aagh! Reduce hierarchies and ensure that decisions are made adjacent to implementation. To me, that is the definition of bottom-up management.

Charlieman

mebbe so. but that’s not what OP says

@7 join the revolution,and there website has been updated and is very smartly presented now,why do you have to be slurred as a anarchist just because you believe in a fair and just society.

Hello, Luis.

With Chris Dillow, you never know where the argument will kick in within the narrative. Normally, the last paragraph or quote, but don’t assume.

His third paragraph triggered me. It may possibly resound with future historians:
“Despite what its left and right critics say, New Labour was not just a marketing ploy. It was also an intellectual project intended to put new life into social democracy. New Labour thought that top-down managerialist policies – such as tax credits, the minimum wage, increased spending on education – could achieve both economic efficiency and greater equality.”

The final paragraph used a quote from a smart Labour loyalist who seeks a different future leadership. A considered quote.

@10

Who said “anarchist” is a slur? As it happens I prefer the Libertarian Communists… but y’know, I’m also aware that here in the Real World most (ie:99.9999%) ordinary people don’t give a flying monkey. Sad but true, I’m afraid.

@12, class war is a non politacal and a free thinking movement and rejects communism,fascism,socalism,liberalism and all other isms that oppress the working and underclass majority in the uk.the revolution is near @12 make sure you join it.

Charlieman

but don’t the examples of top-down managerialist policies he gives in that para (min wage, tax credits, education spending) resemble those I give (taxing externalities, LVT), so he’s not just talking about managerialism within organisations.

I think its right to say that there are potentially profound challenges to social democracy in general, and to New Labour’s version of it. Though I dont see worked through answers from anywhere else on the left, centre or centre-right.

New Labour’s political economy is, largely, to accept the post-Thatcher economic settlement (except with a fairly significant element of re-regulation at the bottom end of the labour market in particular – such as the minimum wage) while contesting the argument about what is done with the proceeds of economic growth – which are directed much more into public services and to a fairly significant amount of quiet redistribution (notably through tax credits), and much less into tax cuts. There is then a Blairite focus on “reform” in public services, perceived as necessary to improve standards but also to legitimise the considerable increases in spending, and sustain public consent for this. There is fairly similar growth from 1979-97 and 1997-2008 but the distribution is different on both of those fronts.

The public “deal” is open markets, pro-globalisation orientation playing to the comparative advantages of the UK economy – and attempting a stronger public consensus for that by mitigating the insecurities inherent in such a model through public spending, public services, education and skills and a measure of redistribution, which was holding inequality back (but not reducing it). In 2005-7, this looked something like a new political settlement and a different post-Thatcherite centre-ground; early Cameronism circa 2005-07 was to some extent about persuading the right to adapt to it – eg accepting Labour spending plans against howls from the smaller state right.

Now, the economic model looks in question – so everyone talks of the need for a rebalanced economy. There is little prospect of extending the scale of spending and redistribution further, and very significant pressure to cut it back. This suggests a different approach is necessary. It is necessary to return to the question of political economy, especially if one has less ability to deal post hoc with market outcomes than was possible from 97-07. New Labour as Blair-Brownism was in many ways a (pale-ish) form of Croslandite social democracy: that redistribution is possible to the extent that it can be done out of growth, but much more difficult without growth. The issue of environmental constraints is also more difficult now than in the mid-90s.

It is true to say that Labour’s debate has not done much to get to grips with this. Nor however (unless one could happily reduce inequality by rolling back the state and rolling forward the big society) have any of the other parties. And within Labour’s centre-left and left and the left outside the party, I get a clearer sense of a critique of how we got here and description of the problem than the answer – which requires both a poltiical economy, and a viable politics to underpin it.

@14 Luis Enrique: “…but don’t the examples of top-down managerialist policies he gives in that para (min wage, tax credits, education spending)…”

Your examples do not give a lot of scope for innovative change. If a business owner wishes to employ a low skilled worker, s/he must pay the minimum wage or higher. (We now have the fake concept of interns who are unpaid, so I suppose there is some innovation.) Tax credits provide opportunities for workers and employers to create jobs that work for both parties; but tax credits don’t always make it better to work.

LVT requires that a land owner works to improve or maintain value. If a supermarket builds on the plot next door, the land owner can sell it to the supermarket and pay tax accordingly. If the land owner has a bright idea for a complementary development, they can make more money. Or they could just hold the land for a while. Lots of options.

‘ And within Labour’s centre-left and left and the left outside the party, I get a clearer sense of a critique of how we got here and description of the problem than the answer – which requires both a poltiical economy, and a viable politics to underpin it. ‘

Sunder, as long as I have taken notice of political economy ( about 25 years) that has been the case. Many very earnest and well-meaning people on the left critique capitalism, consumerism and open markets. Some fair comment and some exaggerated. However, they never come up with credible alternatives at least alternatives that are likely to enjoy popular support. The critiques of globalisation follow a similar pattern. Plenty of criticism but no explanation how they would raise living standards without globalisation. Moreover, they completely fail to understand that in the absence of global war. Globalisation is the natural order.

New Labour thought the main solution to inequality was to pour finance into higher education. However, the paradox since the 1870s of increased state spending on higher education is it actually increases inequality. Very little of the spending actually goes to the bottom quintile. Although I wouldn’t criticise the spending it is the middle classes who monopolise the largesse.

The ConDems, New Labour or writers on the left in general need to figure out a way to raise the incomes of those in the bottom quintile. It is good economics and equitable. Employers will not do it because the labour market has fundamentally changed. The most disadvantaged now do not have skills that are of much value to employers. Whether that means subsidising employment or negative income taxes for some people I don’t know. However, that comes in for criticism on here as subsidising low-wage employers. Globalisation, IT and automation has benefited the majority but it has devalued the labour of the bottom quintile.

I don’t think you can think you can raise incomes through prescriptive measures like raising the NMW, as I tend to take the view that it will only lead to fewer employment opportunities. I don’t usually like the idea of subsidies because they are very distortionary. However, subsidising some employees in redistributive measures is less distortionary than subsidising firms.

^ 1870s^ should read 1970s

@17: “New Labour thought the main solution to inequality was to pour finance into higher education. However, the paradox since the 1970s of increased state spending on higher education is it actually increases inequality. Very little of the spending actually goes to the bottom quintile. Although I wouldn’t criticise the spending it is the middle classes who monopolise the largesse.”

IMO New Labour wasn’t being naive about putting resources into higher education and increasing the percentage of school leavers going to university. Nor was it just cultivating support among the middle classes. New Labour saw greater participation in higher education as a means for reducing income inequalities and enhancing opportunities for social mobility.

“research from the Organisation for Economic Co-operation and Development (OECD) has shown that the graduate earnings premium in the UK is high by international standards, and is lower than those in only five other countries: the Czech Republic, Hungary, Poland, Switzerland and the US.”
http://www.prospects.ac.uk/cms/ShowPage/Home_page/What_do_graduates_do__2007/Graduate_employment_and_salaries_review/p!efbkXli

Umpteen studies across affluent countries report higher employment rates and lower unemployment rates among graduates compared with non-graduates in almost all the countries covered in surveys.

“A degree is now a serious investment both of time and money and many students face debts after completing their course.

“But graduates can expect to earn £100,000 more over their working life after tax than teenagers who get a job after A-levels, according to the government.

“Others put the premium higher; UK graduates earn on average 157% more than non-graduates, according to the Organisation for Economic Co-operation and Development (OECD).”
http://www.mmu.ac.uk/news/news-items/1247/

And this news from a month back shows that graduate job prospects in Britain are still encouraging despite the recent financial crisis and the possibility of a double-dip recession as public spending cuts bite:

The UK graduate jobs market seems to be holding firm, with the lowest graduate unemployment rate for five years. An annual survey tracking students six months after graduation found that 5.6% are out of work, compared with 6.1% the previous year. The highest rates of unemployment were among computer science and creative arts graduates. Students with the lowest degree grades also had the worst employment rates.
http://news.bbc.co.uk/1/hi/education/7549106.stm

“[T]op-down managerialist policies – such as tax credits, the minimum wage, increased spending on education…”

‘Top down managerialism’ sounds rather good!

Re. 1. Surely the banking crisis doesn’t show that TDM can fail catastrophically; it shows that precisely a lack of state intervention can be catastrophic. The banking crisis arose from the idea that individuals in a market do what’s best; insufficient regulation, not too much.

Re. 3. Labour’s redistribution was, simply, insufficient. It was not intrinsically flawed, there simply wasn’t enough of it. More redistribution, more intervention, more managerialism would have produced greater gains.

Re. 4. I think a large part of Labour’s educational goals were not just absolute up-skilling, but relative up-skilling. Namely, that if disadvantaged students were given shiny new schools akin to those of their privileged peers, they could meritocratically compete with them. This is a good aim, but again a bad (insufficient) policy. Again, the state needed needed more intervention (tackling the social inequalities at the root of educational inequality) rather than assuming that still under-privileged peers, could compete on a level playing field.

Re. 5. The Tories’s Spending Cuts website doesn’t seem to have been swamped with substantial recommendations from public sector workers about obvious inefficiencies. Empowerment might be good for inequality (and so have other efficiency benefits), but blaming managerialism seems more like dogma than inference from the evidence.

To put it simply, the problem with New Labour was simply being insufficiently Labourish, the majority of Labour’s bold (top down) interventions were highly positive and if we had more of them we would have seen more success [and probably lost fewer votes from the underprivileged voters who especially benefits from them].

I think the OP’s conclusions are hard to argue with. Irrespective of what happens to the coalition, Labour are in no condition to offer the kind of radical, progressive policies needed: the baleful influence of New Labour will take time to leach out.

It seems likely that, failing some Damascene conversion on the part of one of the leadership candidates, all that will be on offer is some form of NuLabour Lite. They aren’t going to scare the horses by suggesting anything to radical, or risk being labelled as leading the party leftwards into the political wilderness pace the Tory experience at the other political extreme after 1997.

We will probably see some distancing from the worst excesses of Blairism and Brownism, some half baked apologies and re-education. We may even see some admissions that they actually thought Tony was a bit mental, and Gordie would be a disaster..but of course they had to toe the party line etc, etc.

What we won’t see is any well though out, progressive and radical vision of how to promote a fairer, more just and more secure Britain because they just don’t have it in them. If it weren’t so depressing it would be funny.

@ Bob

That is all well and good about higher education. We need people fulfilling their potential. However, it does feck all for inequality because the most disadvantaged get the least from the spending. Sure we can try and empower people or even
‘ up-skill ‘ them. How about a really radical idea just give them more money. The bottom fifth are paying the highest percentage of any income grouping of their gross income in taxes ( 38.7%). They pay (27.9%) in indirect taxes alone. Just give them a rebate and they are no longer poor.

@Richard W: “However, it does feck all for inequality because the most disadvantaged get the least from the spending.”

New Labour in government did far too little to develop vocational eductation opportunities, I agree. It was a sad case of too much talk and too little action.

But, to be blunt, we need to be intellectually honest and recognise the persistence of deeply embedded aversions to the value and importance of education among elements of the white working classes:

“Government figures show only 15% of white working class boys in England got five good GCSEs including maths and English last year. . . Poorer pupils from Indian and Chinese backgrounds fared much better – with 36% and 52% making that grade respectively.”
http://news.bbc.co.uk/1/hi/education/7220683.stm

I certianly favour supporting more opportunities for “modern apprenticeships” but much of that requires a day or two a week at a local further education college and businesses offering apprenticeships are apt to insist on minimal GCSE standards from applicants, like the benchmark 5 good GCSEs, including maths and English, if only as an indication of commitment. About half the boys sitting the GCSE exams can’t make that grade – girls do much better so it’s difficult to argue that the failing of the boys is all down to poverty. The money is usually there for drink and football.