Miliband's indisputable leftward shift has put Labour at ease with itself but risks making the party less relevant than ever.
Ed Miliband hopes his vision, that he set out at conference, will connect with 'the country's wider shared values'.
Many years ago, I was walking down a street in London with a rising Labour politician. On a lamppost we caught sight of a poster advertising a SWP meeting. "Is there a socialist alternative to Kinnock?" the poster asked. "Yes, there is a socialist alternative," laughed Gordon Brown. "But the problem is that no one will vote for it."
Ed Miliband is certainly no Trotskyist. But his speech to the Labour conference in Liverpool this week is already raising some of the same questions that the old SWP poster did. For Miliband is gambling that there is an alternative to contemporary orthodoxy. He believes that the experience of financial collapse, public spending cuts and recessionary inequalities requires a resetting of the collective moral and economic compass. Crucially, he believes that the electorate can be persuaded to embrace it.
Miliband chose his words very carefully. Terms like socialism and capitalism do not appear in his speech. But they were implicit in it. Read in conjunction with the recent New Statesman article by Miliband's strategist Stewart Wood, this week's speech adds up to an attempt to reclaim social democracy as Labour's core route-finding principle. Cautious it may be – Wood sees Labour's aim as the creation of "a better capitalism", which won't please everyone in the Labour ranks – but the argument is put with clarity. It is indisputably a leftward shift from the New Labour years. It is also what Miliband has always wanted, which helps, sort of.
The large question now is whether Labour will succeed in shifting the national argument so that his version of social democracy stands at the centre of public debate. Miliband's conviction that it can is central to his entire leadership. It was embodied in the many sections of this week's speech that tried to connect Miliband's own vision with the country's wider shared values. If he succeeds in setting an agenda of market, welfare and community reforms that voters really want to and do believe in, then he may indeed reshape British politics. But if he fails, Labour's slide to the political margins will continue.
Less than three days after the speech, most of the reaction to it has already fallen into one of two camps. These strike me as too crude in both cases. On the one side there are those who welcome Miliband's commitment and think he can succeed – this was the general mood at Liverpool. On the other there are those who dismiss what Miliband said and think his approach is doomed to failure – which is what the Conservatives will undoubtedly say next week in Manchester.
In fact, the impact of Miliband's speech could be less straightforward than that. This is not an argument between a wholly laissez-faire approach and a wholly dirigiste one. In reality it is an argument about shifting the balance within a narrower set of priorities than those who insist on talking about the end of neoliberalism ever admit. Even so, this was one of the few party leader's speeches that may be remembered for longer than a week after it was given. Most of its actual phrases may already have gone down our mental chutes into the waters of oblivion. But it is quite likely that a lot of people will remember this as the moment when Miliband turned the party away from the New Labour orthodoxy that compromise with global markets is inevitable.
But there are turns and turns. To take an obvious example, which Miliband will have to address eventually, there is all the difference in the world between maintaining the coalition's tax and spending levels and committing to raise them. There is also a gulf between attacking economic predators and extolling producers, as Miliband did this week, and putting strict regulations in place to deny the former and promote the latter. And there is a massive difference between being a party of free trade, a principal that the left has always managed to embrace, and being a party of protection.
If he is dumb, Miliband may be tempted to do what the Tories would love him to do and promise to clamp down directly, almost certainly ineffectively and in all probability with unintended consequences, on morally indefensible excessive pay and bonuses. If he is smart, he will use the bully pulpit, as he did on Tuesday, at least as much as the tax system to encourage the better capitalism, and the better companies, to which he aspires.
The idea that there might be a workforce representative on remuneration committees caused outrage in the rightwing press this week, but it ought to be just the start, not to an expanded role for the unions, but for well-argued and flexible new models of workplace co-determination of the kind that have done so much for German companies.
The best news for Labour I heard in Liverpool is that Andrew Adonis is planning to focus on new thinking about industrial policy, a subject riddled with old ideas, especially in the unions, but which is crucial to any long-term reimagining of the UK economy. It does not follow that the left's traditional state-centred responses are the new centre ground just because people are outraged by the bankers and by indefensible wealth.
The experience of the last three years suggests public opinion has moved to the view that government deficits are part of the problem, rather than the solution. Thursday's vote in Germany and this week's budget in France were the latest reminders of that. Labour was canny about the economy this week: Ed Balls got the balance right in his speech. But parties of the left are losing ground across the world right now and Labour shouldn't imagine there is a magic moral bullet that will enable it to buck that trend.
Labour's move to the left can be, and has already been, exaggerated – by friend and foe alike. Yet it has been a significant declaration by the party nonetheless. The coalition parties will undoubtedly respond, and not merely with abuse and caricature. Expect surprise moves that try to undermine Labour claims to ethical uniqueness.
Electorally, the danger for Labour is that the party will have convinced itself that it has rediscovered its own sense of ethical virtue without persuading sceptical voters that it can run the economy. The party may be more at ease with itself but less relevant than ever. Miliband may want to see himself as the new Clem Attlee. But his ratings suggest that the voters still see him as the new George Lansbury – an unworldly leader and an electoral failure.