Labour must have the courage to say people come before profits, and that it will take steps to regulate the free market
Labour's attitude to immigration will define its future. Its approach to this toxic issue tells us everything we need to know about the party's attitude not just to immigration, but the economy, the state and the party's own electoral strategy. Labour knows it got immigration wrong in government, and is now making rather vague apologies; the leadership says it won't indulge in an arms race but goes on to outline tougher new policies that seem to do just that.
To better understand Labour's immigration mess we need to go back a bit. Coming out of the 1992 general election Labour was a hollowed-out shell of a party. It had been in the wilderness for 13 years and faced at least another four years in the cold. Survival meant winning next time – at almost any cost. The strategy was to align the party with other winners, notably the US and the globalised free-market economy. Bridging the chasm between new friends and old supporters led to the claim that economic efficiency went hand in hand with social justice. Labour would better share the proceeds of growth.
The political economy model Labour adopted was simple: set capitalism free, especially the banks; deregulate the labour markets, and top-skim some of the profits so the state could redistribute by stealth. It worked, after a fashion, until the very freedoms given to capital almost turned the lights out.
Immigration was a central plank of this trickle-down model. Cheap workers from abroad would drive up profits by filling skills gaps and keeping wages down – and therefore inflation in check. What was not to like?
A lot, as it turned out. The consequences of higher levels of immigration where either never thought through or ignored. The most vulnerable felt threatened. In many instances the threat was more perceived than real, but not always. Migrant workers willing to graft for less did exert downward pressure on wages in some places and sectors; new pressures were brought to bear on social housing, schools and hospitals; and investment in training and skills did drop because it was easier to bring in the already qualified from abroad.
But these competing claims for resources were more a result of wider demographic changes and the fact that Labour refused to tax the rich or big business enough to sustain, for instance, investment in new housing stock, which the country was crying out for.
Labour didn't think any of this mattered. It thought it had suspended the laws of economic gravity – growth would continue for ever. And in any case, it reasoned, its insecure and anxious core voters had no one else to vote for.
This phase of Labour policy ended with the biggest crisis of capitalism since 1870, and the party's biggest defeat since 1931, as Labour lifers voted for anyone but Labour. Some went to the BNP; in Scotland they voted SNP; more stayed at home. Since then, they have backed Respect in Bradford West, and in Eastleigh Ukip picked up white working-class voters with promises to close the borders, create jobs and build houses. Some in Labour's ranks privately welcomed the Ukip advance because it might deny the Tories seats, without seeming to care about the national debate sliding even further into the toxic wasteland of anti-foreigners and little Englanders. Winning is still all.
So what can Labour do? Start with a core belief and act on it pragmatically to win the country over. The core belief is: Labour has to be a party of solidarity, and "the free development of each is the condition for the free development of all". Therefore Labour has to be a party based on internationalism – not just what is good for Britain but what is good for people wherever they were lucky, or not, to be born. From this fundamental belief in the equality of all of us as human beings, we need to develop a political strategy that takes us from where we are to where we need to be.
Analysis of the electorate's view of immigration, by the anti-racism campaigners Searchlight, the thinktank British Future and others, shows there is a majority for sanity and solidarity out there, which could be coalesced. A quarter of the population are hardline anti-immigrant – some of them racist. But another quarter, essentially Guardian and Economist readers, support multiculturalism. The remaining 50% are up for grabs, but can be won over.
It will take courage. But Labour must say that people come before profits, that we must build houses, invest in schools and provide well-paid jobs through a proper green new deal and a living wage. The party must also spell out the truth, that migrants claim less in benefits than the rest of us. And that planned, well-managed immigration can continue to make Britain a brilliant place to live.
The alternative is false hopes based on false solutions – which may help Labour win a few battles, but it will lose the war. We now know that if we don't regulate capitalism, then we always end up regulating people to force them to fit the requirements of the market.
The problem is not immigration but free-market capitalism, which uproots people from their homes and encourages the best to leave. That denies us the tax base to invest properly in people and places. It's not a new immigration policy we need, but a new capitalism.