What's in a Name? New Labour's Putative Keynesianism

Abstract

Whatever its limitations, the academic literature has not been short in supplying adjectives to describe and characterize the political economy of New Labour. Yet until Ben Clift and Jim Tomlinson's provocative and imaginative intervention in the debate published in this journal, ‘Keynesian’ was not one of them. In a way it is odd that New Labour's political economy should not previously have been labelled Keynesian – it has, after all, been called almost everything else and, as Clift and Tomlinson show well, there is a certain intuitive appeal to this designation.

In this brief response, however, I seek to demonstrate that the label ‘Keynesian’ is ultimately inappropriate, the resulting characterization misplaced. Despite their pretensions to normative neutrality, I suggest, Clift and Tomlinson's self-evident desire to label New Labour's political economy ‘Keynesian’ leads them to mischaracterize both the literature they critique and the putative object of that literature's and their own analytical attentions. I argue that whilst they do largely succeed in showing that New Labour has not ‘decisively repudiated’ Keynesianism, they do not show that it has actively embraced it. Indeed, even if one were to accept every aspect of their analysis, at best they show that the decision to cede operational independence to the Bank of England has bought consecutive New Labour governments since 1997 the fiscal policy discretion to respond – if, as and when the need arises (or is seen to arise) – to recessionary pressures in a Keynesian fashion. In short, they make a far stronger case for suggesting that New Labour's policies since 1997 are not incompatible with future Keynesianism than they do for suggesting that those policies are themselves Keynesian in intent or content.