3 Jun 2014 04:31pm

The politics of recovery

What are the politics of the recovery? None of our political leaders disputes that, as Mark Carney, governor of the Bank of England, declared on 14 May, the economy has “begun heading back to normal” after the shock of the Great Recession, even if interest rates remain abnormally low

What will decide the general election in 2015 is which party can most successfully articulate a vision of renewal, provided that the British state is not blown apart by the Scottish independence referendum on 18 September. If the vote is Yes, David Cameron would have to resign and we would be in an entirely new world.

But let’s put that on hold for now. As things stand, it’s very unlikely there will be a majority government in 2015. Parliament remains hung. No party has been able to establish a convincing lead in the polls, and all three main parties continue to lose support to Nigel Farage’s Ukip insurgency.

Until recently, most Labour MPs I spoke to were convinced Ed Miliband was destined to be our next prime minister, most likely as the head of a Labour-Liberal Democrat coalition government. The Tories were presiding over what was being described at Westminster as a “voteless recovery”: growth had returned, unemployment was falling, property prices were rising (perhaps dangerously so in London), and yet the government remained stubbornly unpopular.

This was partly because many people did not, on the whole, feel any better off than they were five years ago. Real wages were stagnant or falling and inequality was, and remains, a defining political issue of our times, hence the international success of the French “rock star” economist Thomas Piketty’s 680-page treatise, Capital in the Twenty-First Century, which has been stimulating a wide-ranging public conversation.

However, in recent weeks, for the first time in two years, several polls have put the Conservatives ahead of Labour, which suggests the government is beginning to benefit from the improved economic outlook. Ed Miliband’s personal ratings are also unchangingly dire. It’s as if most voters decided long ago what they think of the cerebral son of a Marxist academic from north London and nothing will change their opinion. If Labour is to return to power, it will be in spite of not because of its leader.

In the late 1970s, when Margaret Thatcher was leader of the opposition, her personal ratings were often poor compared to those of her Labour rival, James Callaghan. As rampant inflation and trade union militancy tore the country apart, Britain was in the grip of a economic and moral crisis. For all her initial unpopularity, Mrs Thatcher understood that the post-war Keynesian consensus was unravelling and what was required was fundamental economic transformation. “Economics are the method,” she said, “the object is to change the soul.” No Marxist would have disagreed with that.

When I last interviewed Ed Miliband, in September 2012, it was clear that he and his advisers believed, as the Thatcherites had, that we were passing through a period of crisis comparable to the 1970s. The financial crash had signalled the end of the free market “neoliberal” consensus and we were entering a new era of government intervention and market regulation. “We have to make markets work better for ordinary people,” Miliband likes to say, explaining his interventionist position on anything from private rent controls to energy prices.

But the economy is no longer in recession. The British nation may be divided between the English south and north and between England and Scotland – and this is reflected in the arithmetic of the electoral map – but in a year’s time, after four more quarters of growth, will anyone be listening to Miliband’s insistent message that we are enduring a “cost of living crisis”?

Miliband is gambling everything on the belief that enough people share his diagnosis of our economic ills and are convinced by his prescriptions for change. David Cameron is the candidate of continuity: non-ideological, pragmatic, pro-market. It may not win him a majority but, equally, is the nation ready for Ed Miliband’s seminar room socialism?

Jason Cowley Jason Cowley is editor of the New Statesman