People before profit: Labour's ethical past and its response to the latest crisis in capitalism.

Davis, Jonathan

Ed Miliband has stated that people are questioning 'the post-1970s consensus about the extent to which unfettered markets always result in optimal outcomes.' This, he says, is 'a problem that requires a fundamental re-examination' (Miliband, 2012a). The Labour Party's own re-examination of the problem has included various ideas such as ethical socialism, Blue Labour and responsible capitalism, which are all driven, in different ways, by the same historic value: that people matter more than profit. These responses need to be understood as working within the framework of Labour's ethical past. As this article will show, ideas from Labour's past are enjoying a resurgence, and are challenging the New Labour assumption that ideological politics ended with the collapse of communism.

The 1970s phase of capitalism began to end in 2008. What will follow is still being worked out. All political parties are discussing this question, but Labour's history shows how it can define what happens next. In the early twentieth century, the party was founded to give workers who wanted parliamentary representation an alternative to the Liberals; after the Second World War, the Labour government set up the NHS and the welfare state as a response to the Great Depression which framed the experience of all policy-makers. It helped to establish an infrastructure based on fairness in a time of austerity. Today, Labour has a similar opportunity to re-craft its own political narrative and the ideals of the country. The ideas that are currently being discussed inside the party are being informed by its best traditions; those that valued community, that put people before profit, and that gave them hope of a society where they mattered more than markets. This article assesses how Labour's ethical past is contributing to the debates about the nature of British democracy.

Capitalism in crisis and Labour's ideas about society

Out of the global crisis in capitalism known as the Long Depression (1873-1896) came the Labour Representation Committee (LRC). The various socialist groups within the labour movement, including the Independent Labour Party (ILP) and Fabian Society, along with the trade unions, joined together in 1900 to form an organisation to give workers parliamentary representation. Within six years, the LRC had become the Labour Party. Although its socialism was generic, as it entwined various strands of left-wing thought, it had at its centre a hope for a more compassionate, ethical future.

At the end of the 1920s, global capitalism was again in crisis as the Wall Street Crash led to mass unemployment, the rise of right-wing extremism, and war. But fifteen years later, Clement Attlee's Labour government, guided by ethical socialism and Fabian ideas, began to fulfil the promise of a better world. The NHS and the welfare state put fairness and equality at the heart of the country, despite the huge financial burdens that the war had left behind. And despite the best efforts of the free-marketeers and privatisers, the NHS celebrated its 65th birthday this year and is still free at the point of use.

In response to both crises, Labour spent part of its time working out what it believed in and what it would do when it got the chance to govern. Hopeful idealists in different groups discussed alternative visions of society that were based on the idea that there was a better world than the one created by capitalism. For example, in the late Victorian era, according to G. D. H. Cole, the ethical socialist William Morris 'passed from Art to Socialism, because he saw that under Capitalism there could be no art and no happiness for the great majority'. As long as 'men remained in thrall to the industrial system, there could be no good art and no good life for the mass of the people' (Cole, 2012 [1917], 57). In the 1930s, the influence of other models of socialism and social democracy (the USSR, FDR's New Deal and Sweden), and debates about state intervention, defined Labour's ideas. These all played a crucial role in clarifying Labour's programme, and the policies implemented by the radical Attlee administration emerged from these discussions (see Davis in Corthorn and Davis, 2008, 73-8).

Labour emerged from both crises in capitalism as a party that sought a different world, replacing capitalism with a system that was not based on exploitation, did not allow unemployment to blight the lives of millions, and would end the pursuit of profit at all costs. While the promise of socialism no longer drives the party today, the values that defined its history are again beginning to shape the debates about what it must do now.

The left has often attempted to reinvent itself and to engage with new ideas (the emergence of the New Left in the 1960s being a good example of this). What is significant about the current engagement with ideas is that it is taking place after the New Labour years when the party followed a more technocratic, less values-based, approach. What can be detected in the arguments of Jon Cruddas, the Labour Left and Maurice Glasman, is a desire for a values-driven approach to define Labour's ideals.

Before the First and Second World Wars, the ILP, Socialist League and Fabians were amongst the groups who generated Labour's ideas. Today, there are advocates of ethical socialism such as the Labour Left and Jon Cruddas. There is Maurice Glasman's Blue Labour, which supports localism and the living wage. And Labour's leadership calls for responsible capitalism and 'One Nation' Labour. Though different in their aims, these groups, like the groups from past eras, are engaging with ideas about the best way to connect with people outside of Westminster and to create a fairer, more humane, society.

Labour is moving away from its New Labour years when it accepted that socialist ideology died in 1991 and that managing democracy was all that mattered. In today's process, Labour is doing what it did in its early years and in the 1930s: it is debating the merits of different forms of government. And although a reformed capitalism, rather than socialism, is the desired outcome for some, there are again groups inside the party who are sketching out an alternative vision of society. It may not be a socialist vision, but it is one that at least challenges the idea that profit matters more than people.

The crisis in liberal democracy

It is not only in the Labour Party that a parallel with the past can be seen. The wider crisis in capitalism today also shares certain traits with earlier eras. The economic similarities, such as mass unemployment, are obvious. But there is also a crisis at the core of liberal democracy as distrust in politicians grows and fewer people vote in elections. In the Victorian era and post-Second World War years, the franchise was not as wide as it is today. The 1884 Representation of the People Act widened the franchise, but it did not bring about universal suffrage as around forty per cent of men and one hundred per cent of women were still without the vote. Supposedly a democracy, 'British politics bore the heavy imprint of traditional, autocratic elements. Participation was, in practice, limited by wealth and class' (Pugh, 2012, 19) (and, of course, gender). It was not until 1969 that the voting age was lowered to 18.

In the past, there was an obvious desire to participate in the democratic process. Throughout the nineteenth century, the dispossessed fought for and gained a voice in parliament as they came to speak collectively through the Labour Party. This desire is harder to find today, and there is a growing self-disenfranchisement as people turn away from politics and politicians. Many see them as corrupt, liars or all the same, and a growing number of people believe that their voice does not matter. This perception highlights a very real problem at the heart of British politics, and a democratic deficit can be seen.

The lack of democratic involvement also reaches into industry and the wider economy. Industries that once belonged to the people are today controlled by distant multinationals. The removal of democratic control in the economy through privatisation, the growing supremacy of markets after their deregulation in the mid-1980s, and the fight for the political centre ground after the 'end' of ideological politics in 1991, have contributed to a growing disengagement from liberal democratic politics. Today, there is a crisis in capitalist democracy that has been more than thirty years in the making, as fewer people participate in the democratic process. This was confirmed by the 2013 Hansard Society Audit of Political Engagement.

Under the heading 'Disenchanted and disinclined: a gloomy prognosis for future engagement' it asks 'where have all the voters gone?' (Hansard Society, 2013, contents). The study found a disgruntled public that is 'disillusioned and disengaged' and notes the 'collapse in the public's certainty to vote' (41 per cent would do so in a general election held now). Only '32 per cent believe that if people "like me" get involved, they can change the way the country is run' (Hansard Society, 2013, 3). Interest in politics 'remains at 42 per cent' and public attitudes towards MPs are still in decline. Fewer can name their own MP or 'are satisfied with the work of MPs generally than was the case even in the aftermath of the parliamentary expenses scandal' (Hansard Society, 2013, 17-18). However, the report did find that there has been an 'increase in the number of people who say they would like to be involved in local and national decision-making (both up by nine percentage points)' (Hansard Society, 2013, 18) and that almost 'half the population (47 per cent) wish they had learned more 'about politics and how our democracy works' at school (Hansard Society, 2013, 4).

Two kinds of disenfranchisement from the democratic process can be detected here. The first is in the reduced interest in ideology, voting and parliamentary politics; the second is the lack of stake people now have in their local industries, leading to them being cut out of the forces that determine the well-being of their local community. This second factor has contributed to the first, as privatisation led to a diminished role within society for the people and their government. The active role once played by both has been replaced by deregulated markets and the pursuit of profits.

A dire consequence of this is the growing gap between the government and the people. In the past, people felt that they could have a direct effect on their living environment through participation in the democratic process. Today, this feeling has been eroded as they realise that markets and not governments are in control. The much-heralded 'end of socialism' and ideological politics after 1991 left most politicians accepting that there was little to discuss except how different variations of market-based economics would be implemented. Politics was not reinvented after the Cold War; instead, the 'winning' side successfully pushed for more deregulation of markets and more privatisation of industries, not just locally, but globally. And this has led to a serious crisis in liberal democracy: if markets have all the power to determine socio-economic realities, then political parties have none. And if parties are unable to make any real change to people's living and working environments once in government, why should people turn out and vote for them?

The question all political parties must therefore be concerned with is how to get people to engage with democracy again. It is likely that people have not lost faith or interest in politics per se, just in the type of politics that has governed for the last three decades. For Labour today as in the past, ethical socialism and the promise of putting people first are ways to connect with people - both working and middle class - who believe that they do not have a voice. An emphasis on ethical politics can let Labour again be the voice of the voiceless.

Ethical socialism: past and present

Ethical socialism confronted the problems of capitalism with ideas and action, and has both an ideological and practical edge. Ideological politics can be seen as the art of what is possible; pragmatic politics the art of what is doable. Labour's actions have often been defined by this clash between its ideological heartbeat and pragmatic mind.

Labour's early socialist ideas stemmed from a moral critique of industrial capitalism and the detrimental consequences it could have for some sections of society. Duncan Tanner notes that 'Labour activists were rooted in a radical, ethical critique of the existing order which developed in the 1890s, largely from the radical nonconformist tradition' (Tanner in Biagini and Reid, 1990, 272). Ethical socialists railed against the free market and competition 'in favour of a moral economy and cooperation' and highlighted how 'capitalism encouraged individualism and competition' and elevated 'selfishness and greed above fellowship' (Bevir, 2011).

The ILP can be seen as the group that best represents Labour's ethical socialist ideals, traditions and values, and Jon Cruddas describes its model as 'romantic', 'anti-statist' and 'built around human emancipation and self-realisation, based on a reaction to capitalist commodification' (Guttenplan, 2013). It is no surprise that two of Labour's towering figures, Keir Hardie and Clement Attlee, were from the ILP.

Other influences such as Fabianism, trade unionism, municipal socialism, Christianity and Marxism, also helped to define the party's early political thought (Bevir, 2011; Harris in Tanner et al., 2000, 9; Foote, 1997, ch. 2, Yeo, 1977). G. D. H. Cole's guild socialism was concerned with workers' democracy, while the Socialist League's William Morris ensured that the movement had 'a spiritual side of socialism' which was not part of the Social Democratic Federation or the Fabians (Thorpe, 2001, 5). This is evident in Morris' views when he spoke of the 'religion' of socialism being 'the only religion which the Socialist League professes' (Morris in Yeo, 1977, 6). But while some adopted socialism as their religion, Christianity, often of the nonconformist kind (such as Methodism), was also a deeply influential part of Labour's religious heritage. With the exception of Fabianism, which was traditionally more concerned with 'managerial socialism', all of these ideas contain within them the essence of ethical socialism. Even Marxism - not normally associated with this strand of socialism - had within it 'ethical components' such as 'emancipation, freedom, co-operation' (Sandle, 2012, 23). Mark Sandle also notes that 'Marx suggests that labour will be fulfilling, diverse and creative' (Sandle, 2012, 26), an idea not dissimilar to William Morris' creative and artistic desires.

Labour's values stem from a belief that people matter more than money, that there is more to life than paid labour, and that this should not be the only thing that defines people. Education, art and literature, for example, are all important in themselves because they bring enjoyment and enrich society, even if there is not always a financial profit to be made. They contribute something other than money to society, but the idea that something can be worthwhile even if it does not make a financial contribution has been lost. Add to these aspects a desire to look after the community, the well-being of others, and the environment (think of Walter Crane's 'Garland for Mayday 1895' which included the slogan 'production is for use not for profit') and the essence of ethical socialism is plain to see. Ethical socialism is a reminder that people are more than just a means to make money for someone else.

This idea is again being discussed in the Labour Party, as similar strands of thought coalesce around ethical politics and economics. Prior to the 2010 General Election, Jon Cruddas, now Labour's policy review coordinator, and Jonathan Rutherford, made a strong case for 'a renewed engagement with the traditions of ethical socialism.' In their opinion 'the centre left must ... restore historical, conceptual and moral depth to its politics. We need to reclaim the philosophical foundations of socialism, for it is the lodestar that will guide us into the future' (Cruddas and Rutherford, 2010, 10-11). Cruddas has since emphasised Labour's 'romantic tradition', asserting that this was 'a reaction to capitalist dispossession, commodification and rationality' and built 'an imaginative, charged, passionate socialism of human virtue, creativity and self realisation dating back to certain artistic and literary movements; of Ruskin and Morris' (Cruddas, 2011).

The party think tank Labour Left describes itself as 'the home of ethical socialism' (http://www.labourleft.co.uk/about/) and its Red Book seeks to 'generate ethically socialist policies' (Clarke and Gardner, 2011, 5). Stuart White has focused on the left and reciprocity, discussing, amongst other things, the ethical socialist R. H. Tawney's 'acquisitive society' and 'functional society' (White in Rutherford and Lockey, 2010, 37), while Allegra Stratton advocated a 'people's bank' that could invest in co-operatives, mutuals and ethical companies (Stratton in Rutherford and Lockey, 2010, 62). Stratton makes the excellent point that this would make 'obvious' the contrast between Labour's approach to the economy and to society and that of George Osborne: 'Osborne's model could be cast as revolving around the atomised individual, Labour's could embody the common good' (Stratton in Rutherford and Lockley, 2010, 62).

Although not part of the specific debates about ethical socialism, Maurice Glasman has made an important contribution to the discussions about Labour's vision of an alternative to neo-liberalism. Glasman's Blue Labour focuses on the idea that people, not profit, must again be placed at the heart of post-2008 capitalism. Like Cruddas, Glasman has called for an end to the commodification of relationships and a challenge to the 'logic of capitalism' that turns 'human beings and their natural environment into commodities' (Helm and Coman, 2011). Part of his response to this aspect of capitalism is to promote more localism and mutual responsibility. A 'renewal of civic democracy' is a crucial part of the Blue Labour agenda (Glasman, 2012, 1). The importance of community and localism is emphasised by his work with London Citizens, an 'alliance of faith institutions, universities, schools and trade unions' (Helm and Coman, 2011). This led to the admirable living wage campaign, which is now an important part of Ed Miliband's programme.

Cruddas and Glasman both reject state-led reform, choosing localism and municipal politics instead. Their ideas are important contributions to the current discussions about Labour's ideological basis, as they represent a different type of politics from the individualism of the free market, and the state-only, top-down ideas that have often characterised Labour's approach to change. Although it is debatable whether such ideas can be made to work nationwide in a globalised economy, such an economy does need a municipal element to help people to reconnect with their socio-economic and political environments.

Perhaps finding a way to unite strands of non-statist ethical socialism with the statist tradition should be explored further by proponents of One Nation Labour. Jon Lawrence has noted that 'advocates of One Nation Labour tend to be more comfortable with the state playing an enabling role in encouraging the spread of local mutualist organisations, hence their emphasis on the need to develop a more "relational state"' (Lawrence, 2013, 9; also see Muir and Cooke, 2012). However Labour manages to find a positive role for the state, it will first have to challenge the Conservative claim that has so successfully argued that today's crisis was caused by the state, not by the bankers.

Labour and the state

The evidence of the positive power of the state still exists in the form of the NHS, which is a constant connection to Labour's proud past. Ed Miliband has played up the importance of this heritage, saying that Labour's 'roots and history' make people 'think about our most dramatic society-changing government, the 1945 government [and] we all remember the NHS, building homes, and the family allowance' (Wintour and Sparrow, 2013, 4). Perhaps there is nothing more ethical in Labour's history than establishing a service whose sole purpose was to make people well, irrespective of their means to pay for good health.

Miliband has also said that 'the global financial crisis has altered our understanding of how markets work best' and therefore the 'next Labour government will have to play a more active role in making markets work for working people' (Miliband, 2012a). Whether this can happen without an extension of democracy into the economy is questionable though. The Attlee government controlled one fifth of the economy via nationalisation. Public money was used to ensure that the post-war mixed economy prioritised the common good. Today, while there is not the political desire in Westminster to renationalise the industries that have been privatised over the last thirty years, there is 'an appetite for socialist policies that tame the excesses of capitalism and re-balance the UK economy in a way that is fairer to the have-nots' (Clarke and Gardner, 2011, 5). There is also a desire to tackle the tax issues that have allowed wealthy individuals and multinational corporations to get away without paying their fair share. And it is only the state that can do this, as was pointed out by Google's Eric Schmidt recently, when he said that it is for the British government to ensure Google pays the right amount of tax. The state has the power to ensure that global corporations act responsibly, pay the taxes they are meant to, and contribute tens of millions of pounds to the public purse.

Making a case for government action would need to include a change in the narrative about what money raised in taxes pays for. Tax used to be about raising revenue for the community rather than the individual; it was 'public money' instead of 'taxpayers' money'. This subtle but important shift in language has, in the last few years, allowed people to see the country's finances in terms of what they personally get out of the tax system, rather than how their money is used for the public good. As Labour Left's Richard Murphy argues, tax 'pays for so many things in life that we too easily take for granted but which are essential to us all, like the NHS, education, pensions, social welfare' (Murphy in Clarke and Gardner, 2011, 87). This public money is the best way to ensure the public good - a concept that has been lost in the individualism of neo-liberalism as the commercialisation of public industries, services and spaces has replaced the notion of the greater good.

The challenge for Labour is to appeal to a generation that does not have the collective memory of the post-war consensus that believed in the welfare state, but also to the generations that do still accept that the state has a role to play to ensure the collective good. A Labour government that argues for ethical politics and pursues a more responsible form of capitalism will need to be more interventionist to ensure that money from multinational corporations finds its way to the public purse. Labour MP Austin Mitchell recalls how the power of interventionist ideas grew during the 1930s and 1940s in the shape of Roosevelt's New Deal, Swedish social democracy, and the Attlee government. The state rectified the problems of the past as a 'recession can't be reversed by the market but requires the use of the state, effective regulation of capitalist excesses, public spending to protect the people and boost demand, and effective management to ensure fairness' (Mitchell in Clarke and Gardner, 2011, 124-5). The Keynesian approach to economics, together with William Beveridge's concern for social welfare, laid the foundations for a different kind of society to the one that existed before the war, and it was one based on hope in an era of dire need. Mitchell's point about the state rectifying the problems of the past is especially relevant to the start of today's crisis, when the state intervened to save the banks.

Emphasising what Labour would use public money for would allow it to define the narrative on the economic questions, highlighting the values that it sees as important and that are at the core of its beliefs. Extra public money recouped from pursuing corporate tax avoiders could be used to help cut the deficit and save the NHS from further privatisation, ensuring that it remains free to help those in need. This money could also help to create jobs in a green economy, as discussed by Labour MP Caroline Flint (Flint, 2012), and contribute to the establishment of a 'people's bank' along the lines advocated by the Institute for Public Policy Research (IPPR). A British Investment Bank, as outlined in the IPPR's report Investing for the Future (Dolphin and Nash, 2012) would be concerned with, among other things, 'upgrades to the energy grid' and 'renewable and low-carbon energy projects'. It would also be '100 per cent state-owned' (Dolphin and Nash, 2012, 17). Investing in the NHS to protect the nation's health, in environmental jobs to bring employment and help halt climate change, and in a bank that puts people and infrastructure, not shareholders, first, would go a long way to emphasising Labour's ethical credentials. It would make Labour's vision for the future clear, demonstrating that it believes that people and their environment matter.

Responsible capitalism and the ethical Labour tradition

In his gradual repositioning of the Labour Party, Ed Miliband has, consciously or otherwise, followed the argument outlined by Jonathan Rutherford and Alan Lockey. They advocated a 'major revision of Labour' calling for it not to be 'frightened by the power of vested interests', to be willing 'to champion democracy' and 'have a reckoning with financial capital' (Rutherford and Lockey, 2010, 28). Miliband has shown that he is willing to stand up against the 'vested interests' Rutherford spoke about. Together with other Labour MPs, he both reflected and shaped the public anger against Rupert Murdoch. But Labour will also have to have a 'reckoning' with financial capital and challenge, seriously, the tax avoidance practices of global corporate giants. As with the position Miliband took over Murdoch, Labour can reflect and shape the mood of many people who do not see fairness where the taxes of the powerful are concerned. Changing the culture of contemporary politics and the economy is the essence of responsible capitalism.

Ed Miliband has identified two economic crises today. The first is 'the "loud" crisis' that 'began with the implosion of financial markets in Wall Street and London, causing a sharp economic contraction that rippled across the globe, triggering recession and unemployment.' The second is a quieter one that led to 'the crisis of living standards of ordinary British families, the majority of whose wages have been stagnating for many years.' In his view, the economy needs to be 'balanced differently' because the 2008 crash 'taught us that our economy requires far-reaching reform' (Miliband, 2012a). His conference promise to freeze energy prices demonstrates a willingness to embark on such reform and to make the state more active where necessary (Miliband, 2013). It is also more evidence that he is willing to take on certain 'vested interests', this time in the privatised economy.

Part of Miliband's reform is concerned with building a 'genuinely competitive' economy (Miliband, 2013) and this may sit uneasily with ethical socialism. But the promise of constructing an economy that is 'focused on the long term and that people feel is fairer', one that is 'inclusive and sustainable' (Miliband, 2013), would begin to shift the emphasis away from the individualism of neo-liberalism and back towards a mixed economy that can find the best of the public and private spirit. While the details of such a responsible capitalism are still, slowly, emerging, the essence of this idea seems to share some values with ethical socialism and the 1945 Attlee government.

This is most noticeable in the desire to ensure that a more equitable distribution of company profits finds their way to those that made them - the workers. Labour MP Teresa Pearce makes this point very well in her support for a living wage. She wrote that if 'we are serious about making work pay then the first step is getting those making the profits to pay the wage bill of their own workers. The workers, who are often the true unsung wealth creators' (Pearce in Clarke and Gardner, 2011, 85).

The emphasis on a living wage is being championed by Maurice Glasman, Ed Miliband, the Labour Left (of which Pearce is a member) and various Labour councils (Boris Johnson is also a supporter). Labour introduced the minimum wage after 1997, and it is right to make a living wage one of its priorities. Ensuring that people are no longer expected to (just about) survive on a minimum income may be the least a Labour government would be expected to do, but it is a clear sign that the party is willing to act on behalf of the poorest in society, just as it did in 1945. Responsible capitalism has within it the seeds of a more ethical approach to politics and economics, as Miliband hinted at in his 2012 Conference speech when he talked about his 'One Nation' idea. The spirit of One Nation, he said, was one 'where everyone has a stake. One Nation: a country where prosperity is fairly shared' (Miliband, 2012b; also see Carr, 2013).

Ed Miliband's call for a responsible capitalism is a small step towards making postcrash capitalism fairer. The details about how Labour's programme would differ from the current caps and cuts capitalism are still not totally clear, although they have become clearer since Labour's conference this year. But the essence of the discussions about the future is clear, and it shares the same aim as ethical socialism: that people must be placed at the centre of the system, not cast aside in the name of profit.

Conclusion

The problems of capitalism that gave birth to the Labour Party are still evident today. So too are the solutions that many turned to in its early years. The ethical politics in Labour's history inspired the values by which it defined itself, and it traditionally sought to ensure that people mattered more than profit. This ideal has been lost over the last three decades, not just in the Labour Party, but in society as a whole. But the party's ethical traditions can help it to create a genuine alternative to neo-liberalism and end the crisis that democracy is now in. These traditions ultimately led to the creation of the welfare state and the NHS, the most ethical elements of Labour's past.

The essence of both of these was fairness, equality and compassion. These values are again evident in the various groups that are discussing Labour's ideas about how it can create the 'good society'. These are concerned with placing people and ethical politics at the heart of the system. A failure to do this will take Britain back more than one hundred years, as the continued pursuit of profit and privatisation will destroy everything that Labour - both the party and the wider movement - helped to build in the last century.

Jonathan Davis is Principal Lecturer in Russian and Modern History at Anglia Ruskin University.

I am grateful to Rohan McWilliam and Michael Wilby for their comments on an early draft of this article.

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Jonathan Davis