After New Labour

Polly Toynbee is again writing in the Guardian, saying that Labour still has a chance if it changes its ways. Too late. By the time another Labour government comes to power in Britain, she will probably be too old to care anyway. Britain and the Labour Party are going to go through the toughest of times in the next few years. Labour may not even survive as a party. Nobody knows how the financial disaster will unfold as it is unknown territory. “Rescue packages” will probably fail.

So here are my predictions. 1970s levels of inflation can be expected and then early 1980s levels of unemployment.

Labour will lose the next election badly. The Conservative government will fail to deal with the recession, which will not probably be at its worst until 2010. Meantime there will be a lot of in-fighting on the left. The Conservatives will enjoy at least two terms because Labour will not be able to mount an effective opposition, whilst the LibDems will continue to be the irrelevance they became from the time they party was formed out of the Libs and the SDP. But around 2015 Labour or its successor will start to regroup into something coherent and to formulate policies.

The Conservatives may lose the election around 2018 but they could win a third and even a fourth term in which case Labour (or some successor party) can expect to stay out of office until 2022.

But now consider how this forecast relates to the 18 year economic cycle. The seemingly mysterious 18 year cycle is due to the interaction between the banking system and the land market and it is something the policy wonks never learn about when they study PPE at Oxbridge.There will be a land price boom in the early 2020s, and there will again be a feeling that it can go on for ever, nobody being ready for the crash of 2026. The incoming government in the early 2020s is going to have this looming crisis waiting for it.

ln the meantime, Britain will have become a very unpleasant place as economic difficulties are going to accelerate the process of social disintegration which has been going on since the Thatcher years.

There will be a short window of opportunity around 2015 in which Labour will have an opportunity to put together sound policies. The main obstacles will be the younger senior members of the Labour Party and the policy wonks who will be peddling the theories they pick up as students.

Essentially, all political parties have the same underlying problem, which is the degraded state of economics theory which makes it impossible to understand either daily economic processes or longer term movements. The Left has the added burden of the legacy of the bogus Marxist theories. Terms like “Capitalism” get bandied about with no precision as to their meaning, futher adding to confusion.

The most useful thing Labour could do would be to look at its origins and the policies it was proposing before World War 1. Some of them remain of relevance. The most important of these is land value taxation. Unfortunately, it has slipped out of sight, which is very convenient for the handful of influential people with enormously valuable land holdings such as those who own – on their own admission – the lion’s share of Central London and whose arguments have to be faced-down.

Once in a generation, the British elect a radical government which is in a position to make lasting changes and the country is ready for them. But each time (1945, 1964, 1997) they have failed to apply the appropriate policies. Had New Labour put a proper system of land value taxation in place when it came to power in 1997, or Old Labour done it in 1945 or 1964, the worst effects of the present crash would have passed Britain by.

When we hear Polly Toynbee and her ilk arguing for this policy in a way that shows they have understood it properly, it will be a sign that the left has got something worthwhile to offer. But they are not going to get the chance for a very long time.