How New Labour turned Britain's Economy over to the US & made it into Washington's Banana Republic

Excerpt from Robin Ramsay's The Rise of New Labour:

“All of this is being done in pursuit of policies which now come under the rubric of ‘the Washington consensus,’ i.e. American-style neo-liberalism. But these policies were adopted by Labour under John Smith as Shadow Chancellor (with Brown as his deputy) when they were quite specifically the policies sought by the City of London. The city’s well-being is top of the economic agenda. At every negotiation with the EU the City’s interests are paramount. The notorious ‘five conditions’ for UK entry into the Single Currency which some bright spark at the Treasury persuaded Gordon Brown to adopt early in his term as Chancellor, refer in general terms to the effect of Single Currency membership on the rest of the economy; but specifically includes Single Currency membership’s effect on the City.

The City has had complete control of the UK’s economic policies since 1979. The last flicker of resistance by Labour to the City’s agenda occurred about a year before the election of 1997 when, for a few weeks, Will Hutton’s take on the City-versus-industry thesis, his idea of the Stakeholder Economy, was apparently being taken seriously by Tony Blair, until the idea was run past Labour’s contacts in the City.

‘One minute the then-editor of The Observer [Will Hutton] was sitting in Blair’s kitchen, watching Tony push down the plunger on the cafetiere, as he said, “Will, stakeholding is going to be our Bible.” (The notion had been at the core of The State We’re In, Hutton’s runaway best-seller which persuaded large numbers of people to join Blair’s rebranded New Labour.) Just six weeks later Hutton found his idea had been dropped, after Blair’s adoption of it had been greeted with suspicion in the business world…'

This account was confirmed by the Australian academic Shann Turnbull, who has proposed a slightly different version of the stakeholder concept. Turnbull wrote:

‘When I met Geoff Mulgan [one of New Labour’s policy advisors in No.10 Downing Street] back in Australia on his honeymoon in 1998 he advised me that stakeholder idea had frightened the big end of town and so it had been dropped. Company directors were concerned that they would be made accountable to people other than shareholders and institutional investors were frightened that it would destroy shareholder value.” (Emphasis added.)

‘The big end of town’ being the City of London is an interesting image. But how big is it? How important is the City to the UK economy? What proportion of the Gross Domestic Product is the City? To have this much power it must be big. At least as big, say, as manufacturing, which has been persistently cut down in the City’s interests for the past 20 years. Wrong. According to the figures produced in 1999 by the City of London’s own propaganda outfit, British Invisibles (which may be presumed to exaggerate somewhat in the City’s favour) the City contributed 6.4% of the UK GDP. That is not a misprint: 6.4%. Manufacturing, by contrast is still, even after twenty years of assault, somewhere between 20% and 30%, depending on how you define manufacturing. And let it be noted, that 6.4% is now mostly owned by Americans. The reorganisation of the City, the so-called ‘big bang’ in 1986, was the beginning of the end for British ownership of the City. These days it is essentially a branch office of Wall Street.

Pursuing ‘the knowledge economy’ (Blair) and ‘an enterprise culture open to all’ (Brown), Blair and Brown may now believe they are on the wave of the future, driven by technology and changing world markets; but the truth is that at the end of the 1980s they simply swallowed whole the ideology of the City of London (the pioneers of globalisation, after all) and adopted its policies, which reflect its interests. The result has been, just as it was under Mrs Thatcher, who was pursuing the same policies, the continued destruction of the manufacturing base of the UK.”

pp 89-90, The Rise of New Labour, Robin Ramsay, Pocket Essentials, 2002.