Globalisation and the Resilience of Social Democracy: Reassessing New Labour's Political Economy

Abstract

This article:

• Places New Labour's political economy in historical context using macro-economic data;
• Demonstrates that the arguments on policy convergence have led to a simplification of the nuances of Labour's political economy and underestimated its partisan nature;
• Highlights how globalisation rather than restraining Labour allowed an unprecedented increase in borrowing and spending making Labour very different to Conservative administrations and more ‘old’ Labour than previous Labour administrations.

There has been considerable debate about the way in which globalisation and neo-liberalism have produced convergence in macro-economic policy. In the British case this convergence is seen in the adoption by the Labour Government (1997–2010) of the core elements of Thatcherite economic policy. However, this article argues that that an examination of macro-economic data demonstrates that is difficult to characterise New Labour as neo-liberal and indeed there is some evidence that it shared a number of commonalities with ‘Old’ Labour. Indeed, in many ways the changing structure of the financial markets removed, to some degree, the shackles from Labour and allowed greater borrowing and spending than previous left of centre administrations. Consequently, as Geoffrey Garrett suggests, partisanship remains an important determinant of economic policy in the UK case.