The Blairite Third way

The General election of 1997 was a turning point in the British political scene. In fact, the Labour routed the Conservatives and left them in ruin after 18 years of Tory rule. The Labour party , in power , with a massive majority , sat the main pillar for a new economic and political orientation known as the Third way under the patronage of the former Prime Minister Tony Blair.

Blair’s victory marked the Labour’s shift to the middle. The reason for having created New Labour is to meet the challenges of a different world. it was neither “ old left” nor “ Conservative right” , it is rather a new distinctive approach based on ideas and ideals not on an out-dated ideology.

Labour’s response after the fourth successive defeat in 1992 was to cease to be a socialist party. In fact Labour was widely perceived as being orientated towards a socialist perspective as the government took responsibility for unemployment, health care and housing. Subsequently, the Labour party decided to end its commitment to Socialism that had been hindering its electoral victory. Within this political wave of New Labour, principles of private enterprise and tightly controlled state spending had to be embraced and applied.

A prominent reason that accounted for Blair’s victory was the collapse of the Soviet Union in the aftermath of the Cold War with the Right losing its rallying external threat of Communism and the Left its primary example of socialist success. With the demise of the ideological conflict, the British had no alternative but to move to the centre.

More importantly, the arrogance of the Conservative Government helped it to ignore the opposition’s arguments. Tories, indeed, considered themselves as having the unique ability to identify and defend British interests.

Tony Blair, ultimately victorious, paved the way for new policies known as the Third way. It was economically shaped by Thatcherism.

 Post-war Labour fundamentally recognised the relationship between state and society in Britain and introduced a number of reforms in education, social security and welfare in an attempt to lay the foundations for a new, more caring society.  

In essence, the Third way was a re – evaluation of social democracy reaching deep into the values of the Left to develop new approaches. Its foremost values were Democracy, liberty, justice, mutual obligation.  He was in favour of an economy and society that combines the individual choice of the free market and the social opportunities of the welfare state. Tony Blair adhered to the idea of the enabling state, in other words, the passive welfare which encourages dependency was replaced by active welfare which encourages initiative, independence and enterprise. Evidently, the state’s role is to encourage employment rather than welfare dependency. Thus, the goal of welfare state is not to redistribute income but to ensure and increase more opportunities for all.

Tony Blair has committed his government to treading the Third Way. Both US President Bill Clinton and German Chancellor Gerhard Schröder espouse the same doctrine. But what does it really mean? BBC Social Affairs Editor Niall Dickson digs behind the rhetoric. 

Additionally, the third way stands for a modernized social democracy since it is passionate in its commitment to social justice and the goals of the centre-left. Therefore, It is based on the principle that Government and industry must work together to achieve key objectives aimed at enhancing the dynamism of the market.

Interestingly enough, it is a “third way” because it moves decisively beyond an Old Left preoccupied by state control, high taxation and producer interests; and a New Right treating public investment.

the Third way did modernize the Labour Party  providing stable economic growth with low inflation, as well as  promoting dynamic and competitive business and industry at home and abroad.

Yet, it was argued, while pointing to Conservative reforms regarding education,  and welfare,  that ‘New Labour’ is simply a progression of Thatcherism with a sharp decrease in welfare payments and a shift from welfare capitalism to Neo – liberalism . In fact, he proved an allegiance to old Thatcherism against labour by advocating the expansion of multinational corporations which are enterprises operating in several countries but managed from one country.

To sum up, the General election of 1997 witnessed the return of the Labour moving to the centre and the emergence of a new social policy that of the Third way where welfare is guaranteed by the state. It was an extension of Thatcherism but with a new spirit of change and reform.

Britain And The European Union

Britain And The European Union

    Following the two disastrous World Wars, of the first half of the 20th century, most of European leaders became convinced that the only way to establish an eternal peace was to unite France and Germany, economically and politically. Although invited to join in, Britain, not ready to lose its sovereignty & being eurosceptic, declined. Thus, Britain’s economic down fall in the 60’s led her to a U-turn in its policy, & finally to its late integration into the EEC leaving the two major parties in great divisions.

  In fact, after all the human losses and the physical destruction caused by an aggressive Germany, the creation of a European Union was vital back then. In other terms, by tying the German economic interests with those of Europe, Germany’s economy would start to be dependant to the European countries’ one as well, and therefore the former nazists’ country would be at last, neutralized. This was at least the main French Stimuli. As for the other members of the union, Germany & Italy were eager to tie their country to other democracies and to develop its economy respectively.

  Indeed the first treaty illustrating this union, was the one of Paris in 1951 known as the ECSC (European Coal and Steel Community) , bringing together six member states ; France, Germany, Italy, Belgium, Luxembourg and the Netherlands .This organization, based on Jean Monnet’s plan, set up a High Authority in order to manage the coal and steel industries in a common market, which was quite significant knowing that both of these materials are the backbone of any industrialized economy. Yet, with this treaty came the first British refusal in joining this new European bus.

  Furthermore the second & main core of the European Union was the EEC (European Economic Community) & the EAEC (European Atomic Energy Community) both established under the treaty of Rome and signed by the Six’ in 1975 removing at last any barriers between them in order to create a wider common market and compete with the US’ economy. Once more, Britain refused to sign the treaty and satisfied itself by creating the European free trade association (EFTA) with the non-EEC countries to secure access to European trading privileges.

  However these successive refusals, according to the Britons, were clearly founded. Undoubtedly, Britain was suspicious about the efficiency of such European projects in the long run.

  At the political level by declining the Schuman plan, consisting of the foundation of the ECSC, the UK had no interest in supranational institutions in Europe, but rather intended to maintain its special relationships with both the USA and the Commonwealth to ensure its economic and political future. More to the point, the British Empire had always rejected the loss of its imperial power after the Second World War, hence, it certainly did not accept to bend down to any centralized European institution. Following this nationalistic spirit the British politicians did not believe in the success of Europe, but even perceived the ECSC as a French conspiracy meant to steal its leader role.

  At a strategic level, Britain did not share France’s fear of Germany, or have any Fascist past to expunge. Not to mention, its island position & power status that kept it apart from the rest of Europe.

  At the economic level, the UK still possessed competitive coal & steel industries in the 50’s, which made its industrial production greater than both of Germany & France combined. Let’s not forget Britain still did have half its trade with the Commonwealth, & joining any European cooperation would harm Britain’s economy.

  Still, this economic boost did not last too long. The economic British performance was worsening in comparison to the rest of Western Europe and the bond with US was weakening. Consequently, Britain made a drastic U-turn by changing its policy about Europe.

                      
  In fact, the British economists started to believe that the integration within the EEC would be a good stimulus for the economy, bringing foreign investment, allowing large scale production & access to a larger free market.

  Politically, fearing that Britain would be isolated from Europe, politicians started to think that an EEC membership would enlarge the political influence of Britain throughout the world.

  More to the point, Britain actually lacked means & allies to break the EEC. So in order to reshape & influence its policies from within, Britain had only but to become one of its members. In addition to that, its membership could bring economic & international benefits to this post imperial disintegrated Britain.

  As a first entry bid into the EEC in 1963, Britain was voted against by General de Gaulle. This latter not only announces that Britain integration will be a threat to the cohesion of this community but also thought that she was not truly committed to this European unity. Not to mention that De Gaulle resented the relationship between Britain & the USA & wanted above all to maintain its dominance on Europe. In this vein, the second British attempt of integration made in 1967 was also unheard & vetoed by De Gaulle.
                            1 January 1973: Britain enters Europe

  When De Gaulle stepped down from power in 1969, Britain was finally admitted among the EEC organization in 1973. The grounds for this success, were also the determination of Heath to make compromises to join this European institution the decay of the Commonwealth & the Six’ will to enlarge the EEC.

  Nevertheless, with this separation from Europe & more specifically from the EEC at its outset, Britain was left behind unable to take the wheel within this European Community.

    In conclusion, Britain held to its imperial power status and has always been a reluctant and difficult partner considering that its relationship between her and the European Union (EU) has never been warm. Albeit, it had joined the integrationist route, Britain remained & still until today, eurosceptic.

The End of The British Empire

   In the aftermath of the second world war the imperial British power began to disintegrate, witnessing not only a the recession in the military & naval force but also its policy of the decolonization also known as the wind of change in 1960 leading afterwards to the dismantling of the British pride by joining the commonwealth.

  Indeed, after being weakened by the repercussions of the second world war ,with the reduction of its wealth & its economic power, a foreign policy had been set. Beginning with, Britain’s call for Indian military back-up during the second world war as it lacked troops, yet, guaranteeing them full independence by the end of it, paving the way for  Britain’s decline. 

  In effect, its military defense greatly relapsed which put the British Empire under the shadow of the United states & the Soviet Union. Not to mention, the economic downfall caused by the expensive spending of the labor government on social programs.

  On this vein as an attempt for economic recovery, Britain sought support from its white dominions such as Australia to regain the value of the sterling as a currency in the trade field. Australia was also a source of assistance against the Soviet threat.

  By the 50’s the Suez Crisis ,which consisted of a confrontation between Britain & Egypt over the Suez canal, displayed even further weaknesses of the British financial & military forces through the demise of its influence on the middle east. As an upshot to the defeat by Egypt, Britain gave up its African colony and worse still its title as a great world power.

                        
  Though it sought to maintain its special relationships with the USA which was its financial aid against the Soviet attack , Britain saw another alternative in Europe by finally joining the EEC in 1973. Indeed, it was an international organization known as the common market aiming at the free movement of labor the abolition of trusts social welfare & foreign trade.

  The British Empire wears thin due to several reasons since it proved its rejection of imperialism asserting new priorities. Furthermore  , the economic problems caused the recession of Britain, together with the international pressures consisting in the cold war dispute between the USA and the soviet union . Britain , indeed , being halted by these issues it also redefined its relationships with its former colonies by granting them freedom though under its control.


  To sum up, the gradual dispossession of Britain from its colonies that drew the deterioration of the British Crown was concrete through the changing in its overseas commitments & its position in world order. 

The breaking of Consensus and the Thatcher Revolution

The breaking of Consensus and the Thatcher Revolution

The post_ war consensus had been the basis of Labour and Conservative policies between 1945 and late 1960. In fact, divisions began to surface within the parties themselves as they attempted to find more distinctive solutions of their own.  Consensus began to wear thin and dissolved into its constituent parts with the Conservatives moving towards Capitalism and the Labour shifting to socialism.

The great strength of the post – war consensus had been its apparent capacity to deliver permanent material prosperity. Yet, the 1960’s and 1970’s confirm a disappointment as far as the British economy was concerned. As a matter of fact Keynesian economics seem to be unable to cope with the economic crisis of 1970. It grew ineffective to produce growth, full employment and a stable level of prices. The term stagflation was coined to describe a combination of low growth, rising unemployment and inflation. Keynesianism was, thus, discredited.

Britain as the world third greater power no longer had meaning. Impediments superseded the economic growth. In fact, Britain’s annual rate of growth between 1955 and 1964 averaged just 2.8. More importantly, the British share of the world trade in manufactured goods significantly fell from 19.8 % to 13.9 % in the same period. Consensus was, then , challenged as Britain was perpetually threatened by crisis after crisis mainly balance of payment deficit , industrial disruption paving the way for the real break which came after the 1979 general election.

Indeed there was a clear need for new ideas and instruments of policy. Following the General election of 1979, the Conservative Party gained power and Margaret Thatcher promoted the policies known as Thatcherism. Actually, it strengthened the powers of central government curbing the powers of trade unions and the local government. It was characterized by free market economy in which the role of the state must be reduced and people should be given the freedom to show their initiative in business. The economy must be free to develop according to the demands of the market forces. She enhanced monetarist policies   that inflation is caused by printing money and can be cured by restricting the money supply. Moreover, in the interests of efficiency, taxation should be kept low, state-controlled industry should be privatised, and free market forces are allowed to operate. Her government, actually, privatized nationalized industries such as British Telecom, British Steel and Gas. This belief was that privately – owned companies were always more likely to produce positive results such as efficiency and profits than those owned by the state. It was mainly based on the fact that government should intervene only to create a free market by lowering taxes, privatizing state industries and increasing restraints on trade unionism. Interestingly enough, it also enhanced deregulation reducing state constraints in the interest of market competitions namely reducing STATE control over business .

Additionally, Thatcher’s government introduced reforms within the trade unions. One of the drastic measures was that Unions had to hold a ballot among members before calling for strikes. It was clear enough that there was a tight control of the union’s power.

Thatcherism was a turning point in Britain’s history with her policies of privatization, deregulation, control of tax and spending which created better economic opportunities for Britain yet the Labour suffered from the social changes that gave the Tories and Thatcherism their chance.

In short, the breakdown of Consensus was due to its ineffectiveness since it no longer served the interest of the British nation. Subsequently, Thatcherism came into existence to remedy the growing problems that caused Britain’s recession.

the impact of the WWII on Britain and the creation of the Consensus

From world war II to Consensus

The situation in 1945 in Britain was marked by the end of the Second World War which was a catalyst for major social, economic and political change. Actually, the impact of the war on Britain was perceptible which paves the way for a post- war coalition setting the pillars of the British consensus as a remedy to the upshots of the war.

 Due to the German bombing, much of Britain was devastated. Casualties reached 400.000 people. It faced huge shortages of raw material as well as the shutdown of factories, communication networks and transportation systems. Britain’s economic position had deteriorated sharply, the devaluation of the pound against the dollar was a sombre evidence of Britain’s dependence on the US.

Yet , the war re- shaped the political scene. In fact, there was a growing awareness that there should be an active role for the state in social and economic management and that the welfare of society could not be achieved using techniques of laissez – faire and non – intervention. In essence, the war enhanced the power to control the economy and cure unemployment.

Indeed, the call for government intervention was approved when the Attlee Cabinet emerged from its 1945 election victory with a mandate for reconstruction and a determination to strengthen the work of the war – time coalition. It was shaped in a Consensus as an implicit informal agreement between political parties to carry out the government’s policies and reforms.

Its foremost pillars were the mixed economy, the welfare state and the conciliation of the trade unions.  

Mainly, the new economic policy was centred around the mixed economy. It advocated the public ownership of basic utilities and an active role for government in managing the economy. The government, thus, felt that the best way to modernize and restructure industry was to nationalize it. Namely , it consists of transferring the basic means of production to public ownership concerning mainly key industries such as coal , iron, steel , railways and the banking system. The idea behind the necessity of government was that a massive government spending could quickly remove unemployment. As a matter of fact , to run the economy at a level to provide full employment was part of the post war consensus .Adhering to this policy , the government accepted the duty of managing demand as a means of producing full employment . Keynesianism proved   that active government intervention in the marketplace and monetary policy is the best method of ensuring economic growth and stability.

Another key principle of the consensus was the welfare state . Indeed , the labour government of 1945- 1951 were given most of the credits for setting up such a system in Britain. Their social reform was essentially based on the Beveridge report of William Beveridge. It was the source of inspiration for much of the welfare legislation. Respectively, in 1945 and 1946 , legislation provided for family allowances , sickness , benefits and national assistance. In 1948 , the National Health Service was established to provide free medical treatment . in effect , these reforms were meant to meet the needs of people as well as fairer opportunities for all in the new society.

Eventually , there was a room for a conciliation of the trade unions in the post- war era. Their bargaining position was helped by full employment and the consultative status they were granted by Labour and by the succeeding Conservative government that accepted these policies believing that the post – war reconstruction of society and economy should be similarly planned and directed by the government. Not to mention that  Conservatives had no alternative but re-adjust their discourse to make it meet popular expectations. Their new discourse reveals a certain degree of maturity and a balance of realism as well as pragmatism to serve their own interests.

With the conservatives in power  , the general pattern remained a basic commitment to the mixed economy and Keynesian planning of budget. Churchill’s government  , indeed, confirmed the boundaries between the public and private sectors which remained intact for the next decades. They denationalized only the steel and road transport industries.

More importantly , Conservatives proved their loyalty to the Consensus claiming that housing , health care , education are the responsibilities of   the state. Actually , they increased spending on social services. Capital expenditure on the National Health Service almost doubled between 1951 and 1962.  Welfare state programs were not only maintained but rather enhanced.

As for the trade unions , they were brought closer to a conservative cabinet since Churchill was enthusiastic to pursue a policy of industrial appeasement and a conciliation. He devoted much energy to bring the two sides of industry together. Nevertheless  , the era of Conservatives was not that of a significant social policy change. Therefore , except for some denationalizations , the Conservatives kept the welfare state and its achievements after their victory in 1951.

In short , the consensus was seen as a mutual agreement between the two parties about the general direction of their policies. They attempted at fostering new measures for Britain to regain its position and overcome the devastating effects of the war.