How New Labour Lost Its Market

When the government party comes fifth in an election behind the Greens and the BNP, you know they’ve got problems. If they were a business, they’d be heading for bankruptcy.

Heres my admittedly simple-minded take on the history of British politics in the last hundred years. Things started so well for Labour at the beginning of the 20th century. They spotted a new market of newly enfranchised working class voters, added a targeting of liberal intellectuals who’d previously supported the Liberals, and the consequence was, the Labour Party formed its first government. Their second and greatest success came after the second world war, when they had a massive majority of voters hungry for change. They delivered on their promises with the National Health Service and much more welfare state and government control of industry and the economy.

This didn’t last because of the poor state of the economy in war-ravaged Britain but they were now an electable party and, better still, the Conservatives adapted their product to the new climate and embraced the welfare state. After further periods in government in the sixties and seventies, the Labour product became discredited as the welfare state became more expensive to manage and the government-control of industries was discredited by strikes instigated by powerful left-wing Unions. A good time then for the Conservatives to come up with a new improved product that promised to tame the unions and use market forces to sort out industry and the economy. The delivery of low income taxes and prosperity was crucial.

Poor handling of the economy led to the downfall of the Conservatives after a long period of success. However, after three defeats, the Labour leadership’s analysis was (rightly) that they had allowed themselves to become controlled by the hard left and their outdated policies. They could only get themselves elected if they appealed to the middle ground. So, just as a generation earlier the Conservatives had embraced the welfare state, now Labour now took on the Conservatives’ clothes- yes to market forces, no to union power, yes to low taxes, no to government intervention.

This would have been a good idea if they had retained a bedrock of solid left-of-centre policies. However New Labour abandoned their original market. They have let poor working class get poorer and have outraged liberal intellectuals because of the Iraq war, 42 day detentions and other reasons too numerous to list. If the new market was more reliable this wouldn’t necessarily matter but the ‘middle ground’ is fickle, caring only about how prosperous they feel. While the economy was ‘safe in their hands’, Labour was safe. Now, the party may be beginning to realise that New Labour was built on sand and it no longer has any rock on which to rely or rebuild.

It’s a shame really because things could have been so different. The collapse of the world economy has exposed the failures of a purely market economy. It should have been the opportunity for Labour to show that their traditional Keynesian approach to economics, where the state intervenes to control and stimulate the market, is a better model. No chance of that with the Conservatives.

Every lasting business knows that following the market is a short term solution with temporary results. Long term success relies on an authentic product with which at a profitable section of the market can identify. Governments will always come and go depending on how they are perceived to be protecting us, primarily by managing the economy well but also against ill health, terrorism and so on. But parties, like businesses, can only continue if they have core values that voters/customers connect with. The problem is, no-one knows what either of the main parties’ values are anymore.

Faking It

Does authenticity matter, asks Seth Godin. If the fake Rembrandt has fooled the experts, if Shakespeare didn’t write parts of his plays, if Churchill put his historic speeches on record after the event, if some of The Beatles’ songs weren’t recorded by all four of the Fabs, does it matter?

If the effect of the fake on you is the same as the ‘authentic’ version, it probably doesn’t. It is, if you like, all in the mind, and we should all trust our own feelings not what we’re told to feel. In business, it does matter though, because, if someone deliberately sells a fake Rolex, no matter how authentic looking, as the real thing, and they therefore charge a much higher price than justified- that’s fraud. And if you tell a customer something that isn’t true, you’ll be found out eventually, seriously damage your reputation- and may even be prosecuted.

Turn 20% into 80%

Thanks to Gary Bencivenga for reminding us about The Pareto Principle, which states that 20% of your customers give you 80% of your business. He tells us that it also applies to other aspects of your life. For example, you probably wear 20% of the clothes in your wardrobe 80% of the time. Most people find that they only spend 20% of their working week doing that which gives them 80% of their satisfaction. When I was a manager, I spent most of my time doing tedious admin. Now, as a freelance marketer, I spend nearly all my time on writing and PR, make a bit more money and- most importantly- am much happier.