On 25th April 2026 I wrote in LDV about the longer-term political background to the Mandelson debacle, referencing his time on Lambeth Council and the rise of the anti-left in the Labour Party, alongside the formation of the SDP, which partially sprung from there (see yesterday’s Guardian article).
The main conclusion of the LDV article was that Mandelson’s political orientation was shaped by opposition to the far-left in the Labour Party, (reinforced by the militant left’s control of Lambeth Council in the 1970s and 1980s). Mandelson’s close colleagues then, such as the subsequently ennobled Roger Liddle, Matthew Oakeshott, and the late George Thomson (associated with BBC and ITV governance), not only opposed the far left, they also objected to Thatcherism. They particularly opposed those of the left and right who were sceptical of internationalism and EU cooperation, especially dissenters from the quasi-corporatist European ‘social democratic consensus’. Mandelson stayed in the Labour party to fight the left, but Oakeshott and Liddle joined the SDP, the latter, being close to Mandelson, rejoining Labour after 6 years.
This group, and many Labour colleagues, believed that the Labour Party would never regain power again if it remained under far left control, hostile to ‘right-wing’ mainstream media and the big business and finance organisations behind them. Being cosy with international business helped get PM Blair elected in 1997, and softened media scepticism towards PM Starmer in early 2024. However, in cosying up to big business and finance, attitudes to economic elites and oligarchs began to border on adulation.
But there is a serious policy problem. The last 19 years has seen a transformation of the world economy, since the 2007-8 financial crisis. The rise of the Chinese economy has occurred alongside the rise of ‘financialisation’ and concomitant authoritarian bureaucratisation in the West; leading to increasing economic concentration and ‘stealthy monopolisation’. Asset prices rise in a bubble, as long term economic performance in the ‘real sector’ declines, and Western governments ignore the fiscal & debt sustainability tsunami.
In the USA for example, the top 1000th households control more than 20% of all wealth; the top 10% control 70% of wealth, whilst poverty increases and average life expectancy falls. In absence of realistic remedies, in the USA and in ‘OECD Europe’, the European social democratic establishment consensus is rapidly on its way out. Defining and tackling these problems is a gargantuan task. But such remedies are unlikely to come from a cadre of senior politicians and officials who have become immersed in elite-adulation culture. Many technical reforms are required, made difficult by the threat of a ‘hard landing’. Unravelling the index funds, hedge funds and derivatives markets without crashing the economy is possible, but technically labyrinthine.
Financialisation and unsustainable government debt in the West have in part been fuelled by the recycling of the Petrodollar from the Gulf into the US, Japan and European economies. This process is dangerously fragile now as oil revenues from the GCC decline, and as the Petroyuan and Petrorial develop. Restructuring of Western economic systems may be forced upon it. This is made more likely as long as Western public policymaking remains in the grip of increasingly concentrated financial interests, and granite-like bureaucratisation, which cannot accept the size and nature of the problem. In the end, others will have to pick up the pieces.
In the West, relative economic success used to be associated with democracy, openness, transparency and competition. Deep misunderstandings about the Chinese economy appear to have swept those assumptions aside; rather self-serving for Western elites and bureaucracies. But in those assumption lie the remedies to save the West from catastrophe.
* Paul Reynolds works with multilateral organisations as an independent adviser on international relations, economics, and senior governance.
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5 Comments
“This group, and many Labour colleagues, believed that the Labour Party would never regain power again if it remained under far left control……..
Unlike those who earlier left the Labour Party to form the SDP, they didn’t believe this. They believed Labour could win and had to be stopped.
Mandelson himself said in 2017 that:
“he worked ‘every single day’ in small ways to bring about the end of Corbyn’s leadership”.
He conceded that Labour could have won if the party had been more united which suggested he wanted to take credit for the narrow defeat.
Which of Corbyn’s campiagn policies do you consider to be “far left”? Most Labour Party members wanted, and still do want, a return to the mixed economy of the post war period. Support for this used to be LIb Dem policy too at one time.
@ Paul Reybolds, “Mandelson’s political orientation was shaped by opposition to the far-left in the Labour Party, ”
That may have come later, Paul, but his early orientation was shaped by his Grandfather (and right wing Attlee Cabinet Minister) Herbert Morrison. Oakeshott was also a Lib Dem for a number of years before becoming disenchanted (as were so many others) with Clegg.
The problem for the Labour Party has been highlighted by the ‘tabula rasa’ approach of Sir Keir Starmer once he was elected PM. Labour cannot adopt a socialist programme for fear of what happened to Foot and Corbyn, even if the leaders are so inclined. They cannot have a showndown beween the underlying ideologies of the different factions, for fear of what happened to Kinnock; such a showndown being probably necessary if they want to present a clear vision to the public. They cannot deal with the problem of the Party’s ranks being filled with lobbyists and PR folk, linked stealthily to big business and finance (Mandelson-style); the source of much public unpopularity. But more importantly, the Party is no longer the party of industrial labour. It is the party of public sector dominated unions, and big donors. In practice it is the statist party of the bureaucracy and their vast multitude of well-heeled crony contractors, at local and national level. Whichever faction dominates post-Starmer, they will be ‘structurally incapable’ ofdefining the problems the UK faces, let alone solving them. The public knows very well that under Labour the problems of increasing economic concentration, elite dominance, cronyism, financialisation, and self-serving bureaucatisation, will remain unsolved. Under Labour, the UK’s fiscal, social and environmental unsustainability will continue … until it breaks.
Hi Paul,
I like your perception. I shall need a couple of days to digest the full meaning and implications of the ‘tabula rasa’ approach of Sir Keir Starmer once he was elected PM” and whether it will lead to a downfall. Camden, (and nations?) watch and wait.
“Labour cannot adopt a socialist programme for fear of what happened to Foot and Corbyn……..”
I don’t understand this comment. Michael Foot lost in 1983, which was an election primarily about the Falklands. Jeremy Corbyn lost in 2019, an election primarily about Brexit. The problem for JC was that the Labour traditional support base was largely pro Brexit whereas the more Socially Democratic minded PLP was largely anti.
JC tried his best to ride the two horses simultaneously but unfortunately his skills as a circus performer weren’t quite up to it.
His peformance in 2017 was much better, coming within a whisker of winning on what was often described as a socialist platform but in actual fact was nothing out of the ordinary. Peter Mandeslon himself conceded Labour could well have won had the party been united. Mandelson, naturally, did his best to ensure it wasn’t.
“………even if the leaders are so inclined”
They aren’t inclined. They knew they had to pretend to be inclined to become leaders, though.