RIP New Labour! Hello Old Labour and Socialism?

Does the introduction of a new top rate of tax in the UK signify a new socialist era in Britain and Europe?

The announcement by the British Chancellor of a new top rate of tax in his pre-budget report (PBR) is seen by many to spell the end of Blairite, New Labour financial policy.  But does this reversion to traditional “Old Labour” fiscal policy herald the dawn of a new socialist model of economics for the UK and in turn Europe?

As Europe deals with the aftermath of the so called “free for all” capitalism of the 90s and early 2000s it certainly seems to be the ideal time for any such change.  The prevailing public opinion seems to be that the current financial crisis has been brought about by the unrestricted greed of those chasing the capitalist dream.

The introduction of the new top rate of tax in the UK is certainly a rejection of Blairite financial policy that had promised to celebrate and not to penalise wealth.  There were also a number of other measures introduced in the PBR that sit well with the idea of a socialist economic model being adopted by the UK.   £775m was committed to the development of new homes and the renovation of social housing, and overall the PBR represented a £20bn fiscal stimulus funded by public borrowing. Ally this new direction in economic policy in the UK with the recent surge in public ownership of banks and the billions of public funds spent propping up the remaining institutions across the continent and you have a convincing argument that Europe is embracing a socialist economic model. 

Despite all of this evidence, any proclamation of a socialist Europe is a long time away.  For starters it is worth a glance at the identity of the ruling parties of nations in the EU.  The number of ruling socialist/social democratic parties in Europe has fallen from 11 in 2000 to just four in 2008 with only the UK being what can be considered a leading European economic major player under a socialist party.  Even in the UK despite evidence of a return to “Old Labour” socialist values there are signs that they remain committed to political capitalism, albeit a more closely regulated one.  The PBR included a number of features that point to a continued commitment to private enterprise and capitalism, measures such as the cut in VAT from 17.5 percent to 15 percent to stimulate consumer spending and a £4bn loan from the European Investment Bank to allow UK banks to help small and medium-sized business.

Although the current financial crisis has resulted in the introduction of a number of socialist economic policies, there remains a commitment to capitalism in Europe, as demonstrated by the low number of ruling socialist/social democratic parties on the continent.  While it can be argued that the UK, the leading economic nation to have such a government, is adopting a socialist economic model these measures can be seen more as pragmatic responses to an unprecedented crisis and not the onset of a new political and economic era in the country or in Europe. 

Capitalism may be struggling but a new socialist world order remains confined to the pages of Das Kapital, for the time being.