Depoliticisation as an orthodox account of British economic policy since 1997

Contents

1 Introduction

2 What is depoliticisation?

3 Depoliticisation in Britain since 1997

4 Depoliticisation: an orthodox account of British economic policy?

5 What criticisms can be made of this thesis?

6 Conclusion

7 Bibliography

1 Introduction

On May 7th 1997, the day after Mr Gordon Brown announced the “operational independence” of the Bank of England, The Times wrote: “Mr Brown has signalled the most fundamental shake-up of the Bank of England since its foundation nearly 303 years ago.”^[1], while Larry Elliot commented in The Guardian: “Labour doesn’t want to make big decisions it wants them taken off its hands so to concentrate on micro changes and be blame-free when things go wrong.”^[2] This decision made by New Labour shortly after coming into office was indeed a brave move but just another step in what today is commonly known as the “politics of depoliticisation”. Only a few authors have yet dealt with this interesting development that is taking place not only in Britain, but also in many other democracies all over the world. In this essay we are going to focus ourselves on the British case, where the change of government in 1997 seems to have intensified the depoliticisation movement. To give a comprehensive picture of the actual debate in the literature on depoliticisation we will review the work done so far by Peter Burnham, Jim Buller and Matthew Flinders. Both papers, Burnham (2001) and Buller & Flinders (2005), try to stimulate debate and research on a political phenomenon that seems not to be new but nevertheless worth to discuss if we want to understand the rationale guiding present British policy. The first part of this essay gives a definition of depoliticisation and an overview of its most important characteristics. The second part deals with the applicability of this term to recent developments in British policy since New Labour came into power in 1997. Finally, we show what criticisms and doubts can be raised in regard to this issue.

2 What is depoliticisation?

According to Burnham, depoliticisation can be defined as a governing strategy that places “at one remove the political character of decision-making.” (Burnham, 2001, p. 128) Using this strategy, politicians can retain “arm’s-length control over crucial economic and social processes, whilst simultaneously benefiting from its distancing effects.” (Burnham, 2001, p. 129) Moreover, depoliticisation is a political tool to influence market expectations on the credibility of a government, shielding it at the same time from any consequences of unpopular measures. In his papers from 1999 and 2001 Burnham develops a theoretical approach to different forms of statecraft, dividing them into ‘politicised’ and ‘depoliticised’ governing strategies. This approach is based on an “open Marxist” (Grant, 2002, p. 90) view of the state, which claims that the state is an aspect of the social relations of production. Thus, the role and power of the polity consists in its ability to reorganize the labour-capital relations and to ensure the expansion of surplus value in both domestic and international markets. In addition, Burnham emphasizes that in a capitalist society as depicted by Marx, the state is not a passive, powerless entity. Rather it is a dynamic actor on the stage of international political economy, apparently separated from civil society, seeking to serve capitalism by managing the relations between labour and money. In this respect, a depoliticised governing strategy, as opposed to a politicised one, doesn’t mean that politics or political influence is withdrawn from socioeconomic environment. On the contrary it can be regarded as an ‘indirect way’ of delivering government services and policies through independent agencies and channels to the public, therefore altering expectations on credibility, effectiveness and eventually governing competence.

3 Depoliticisation in Britain since 1997

Once having defined the concept of depoliticisation generally we can proceed to analyze what distinct forms this political strategy took in Britain and why it has become an established orthodox account of British economic policy. As we have indicated, it is not a new phenomenon particularly attributable to New Labour. Burnham argues that Britain’s return to the gold standard in 1925 and the joining of the ERM^[3] in the early 1990’s are clear examples for a transition from a discretion-based (politicised) to a rules-based (depoliticised) governing strategy. According to his papers, the former is characterized by the government’s direct responsibility for economic management and its propensity to intervene directly in disruptions of the labour-capital balance, thus taking immediate credit if being successful but also risking a ‘state crisis’ if not. In this context, Burnham^[4] states that the principal features of the politicised mode of economic management, especially in the period of 1945-1976, are the following:

- Direct controls over production, consumption and exchange (large degree of public ownership)
- Formal and informal incomes policies, best known through the “stop and go cycles” in the 1950’s and 60’s
- Downgrading of exchange rate management in the Bretton Woods era
- Monetary policy under formal responsibility of the Treasury (Bank of England Act 1946)
- No significant interlinking between fiscal and monetary policies
- Centralisation of policy-making (including trade union representation)
- Political disputes derived from a growing public sector with state as employer
- International co-operation (rather than integration)

On the other side, depoliticised state management means the reassignment from tasks from the governing party to operationally independent bodies (also known as ‘new public management’) to reassure its commitment to ‘market-demanded’ goals like price stability and competitiveness. Moreover it seeks to increase accountability, transparency and external validation of policy (e.g. New Labour’s Fiscal Code, IMF^[5] Code of Good Practice) and also to limit its room for political discretion by accepting binding rules (e.g. ERM, WTO^[6] Dispute Settlement Mechanism). (Burnham, 2001, p. 131) The key features here, contrasting with those mentioned above, can be listed as:

- Relaxation/abolition of direct controls
- Downgrading of incomes policies
- Preference for fixed exchange rate mechanisms (ERM, EMU^[7] )
- Institutional realignment to enhance to policy credibility (central bank independence)
- Interlinking of fiscal, monetary and exchange rate policy
- Decentralisation and devolution of policy-making (legislative marginalisation of trade unions)
- Privatisation and deregulation towards a ‘managerial state’
- New public management in Blair’s ‘Third Way’: support for agencies and user- groups
- Regional integration (EU, NAFTA^[8], APEC^[9] etc.)

[...]

^[1] Quotation cited in E. Balls and G. O’Donnell (eds.), Reforming Britain’s Economic and Financial Policy (2002)

^[2] Quotation cited in C. Hay, The Political Economy of New Labour (1999)

^[3] European Exchange Rate Mechanism

^[4] See Burnham (1999) and Burnham (2001)

^[5] International Monetary Fund

^[6] World Trade Organisation

^[7] European Monetary Union

^[8] North American Free Trade Agreement

^[9] Asia-Pacific Economic Cooperation