Alan Johnson's "Alternative"

Alan Johnson's first speech as shadow chancellor (full text here) was interesting. Sunny titled his preview 'Labour abandons Darling's plan, to focus on growth, not cuts'. If only that was the case.

It was necessary for Johnson to nail the lie of Labour's "profligacy", a myth the Coalition have spun to draw a veil over the culpability of the Tories' city mates for the crisis. And by prefacing the meat of his speech this way Johnson employed it to good effect. However just as Dave and co have conveniently forgotten their support for Labour's public spending up to the banking collapse, so the marketisation of the NHS, higher education and bit-part privatisations of the benefits system have disappeared into our leadership's memory hole. Labour's 13 years in government saw more investment in the public sector, but it went hand in hand with wasteful PFI projects and a never-ending procession of cuts.

But this is the new generation, right? Turn over a new leaf and all that? Unfortunately, while not as cut-happy as Darling's blood curdling "worse than Thatcher" comments before the election, the new Miliband/Johnson plan has the awful tendency to undermine itself. While the new 'alternative' doffs its cap to Ed Ball's recent adventures in Keynesianism it still accepts the need for cuts.

Johnson is absolutely right to say "without growth, attempts to cut the deficit will be self defeating. A rising dole queue means a bigger welfare bill. And less tax coming in" and "a spending cut hits growth twice as hard as a tax change – three times as hard when it’s capital spending." There are some good arguments here the anti-cuts movement can deploy against the Conservatives and their LibDem running dogs. At times the point is made so well, especially against the banks, that you could be forgiven for thinking you're reading Labour party policy circa 1974 than a post-New Labour tract. But then neoliberal common sense (an oxymoron if there ever was one) spoils it all by rearing its ugly head.

Johnson informs us that "we can't oppose every cut". Cue continuity with the harrying of the disabled, the great welfare cheat witch-hunt, changes to housing benefit, "tough decisions" on public sector pensions and pay, and an endorsement of halving public borrowing over the next few years. Provided the Coalition cuts responsibly, Labour - or at least the leadership - will support it.

And they call this opposition.

If the need for cuts to bring down the deficit is accepted - and I do not - the new plan does at least make some sort of sense. A slower pace of public spending cuts would theoretically allow the private sector time to adapt to the new situation. It's a difference between cutting as part of an overall economic strategy vs chainsawing through the public sector without a care for the consequences.

But both depend on magical thinking. The Tories think quickly chopping up the social wage and amputating parts of the economy will let business fill the gap. Ed and Alan envisage a similar process, but on a more gradual time scale. None of it is based on solid evidence or previous experience. Freezing wages, chucking public sector workers out of their jobs, holding down benefits etc. have the same depressing effects on the economy whether one favours deficit reduction by a 70:30 or 50:50 cuts/tax ratio.

The Miliband/Johnson "plan" is an alternative in degree, not in kind. It is an awkward mish-mash of neoliberalism and Keynesianism. They want to cut, but accept the need to invest. They want to invest, but accept the cuts argument. Ultimately we're left with an incoherent approach that will neither satisfy the right wing press or the bulk of the labour movement. The party may have the "luxury" of opposition but events have an annoying habit of catching up with and throwing political programmes into sharp relief. And when they do, which way will the leadership jump?