New Labour’s greatest intellectual error, on the economy, was to forget the good sense of the labour movement, and presume — showing its fealty to neoclassical economics — that the whirring machine of capitalism would produce the goods which a benevolent government could then seek to redistribute in more acceptable manner. [...]
[...] New Labour ended up taking from the somewhat better off, and giving to the worse off: inequality at the very top of society was left to skyrocket, unchallenged. But they failed, singularly, to address the economy’s structural flaws: its growing dependency on household debt, its yawning balance of payments, its ballooning financial institutions. A failure to tackle these — indeed, on the last, the active encouragement of said ballooning — helped drive the economy full-tilt into the brick wall of the global financial crisis of the late 2000s. As a result of this crisis, austerity measures are now busily tearing through those mildly redistributive measures Labour introduced: Education Maintenance Allowance — gone; Sure Start centres — chopped; tax credits — going. The fruits of New Labour’s compromise with high finance lasted no longer than a decade; it was able to defend, partially, some of the historic gains of the labour movement, most notably the NHS, but even those are now, under austerity, open to attack.