Johann Hari: This is no time for Cameronomics economics

A recession is when you most need an active government on your side
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The Independent Online

If politics was purely a clash of ideas, David Cameron would now be facing the same fate as Lehman Brothers. The Tory leader has reversed his beliefs on many issues, from global warming to gay rights, but on one question he has shown lifelong consistency: rolling back government regulation until we have a small, small state. He is never more passionate than when condemning "the mania for regulation" and declaring that the state "does too much." It is the beating heart of his politics – and it just had an attack of angina before a watching world.

"To me," Cameron said recently, "my entry into politics was all about the individual versus the big state." In his mind, the individual invariably swells as the state recedes. You can see a case study of the flaws in this philosophy in his 2006 economic policy review. It recommended deregulating the mortgage market so sub-prime mortgages could come to Britain – just before they brought the world economy crashing down on individuals everywhere.

In response to the Great Wall Street Crash of 2008, Cameron has lashed out with real anger. Not at the banks and deregulators who made it happen. No – at the people who correctly warned that if you strip away all restraints, markets will devour themselves. He announced: "We must not let the left use this as an excuse to wreck an important part of the British and world economy."

The most senior figures in the Conservative squire-archy agree. George Osborne attacked the advocates of re-regulation for a "desperate lurch to the left", and opposed the tourniquet of nationalising Northern Rock. John Redwood – in charge of Cameron's deregulation programme – jeered at the "fashionable" conviction "that because there is a mess in the banking world there needs to be more regulation." Boris Johnson just accused the British people of "whingeing" about this crisis and succumbing to "neo-socialist claptrap". He then defended "the sub-prime sector", saying, "These products allowed millions of Americans to own their own homes." Yes – for five minutes, before having them repossessed in a landslide of bad debt.

In the middle of this global conservatism-crunch, the Tory Party is even more aggressively re-stating the dogmas that led us into the collapse. It is as if they are part of a historical re-enactment society dedicated to re-playing the Herbert Hoover years. When even Comrade George Bush has taken over half the US mortgage market, this is a position way out on the market fundamentalist fringe. They don't seem to have realised that the Cameron prism of "the individual versus the big state" has little purchase when the individual needs the big state to prevent the economy haemorraghing. We are all Goldman Sachs Socialists now.

But politics is not a pure battle of ideas: it is refracted through personalities and parties and images. This is where Labour has a problem. Gordon Brown's speech this week was much better than before. He highlighted the (too few) genuinely progressive things the government has done, in simple human terms. The doubled spending on the NHS has brought waiting lists crashing down and stopped the annual winter crises. "That's not just a statistic," Brown said. "That's a dad who lives to walk his daughter down the aisle. That's a gran who lives to see her grandson graduate." This – not the horrors of Iraq or sucking up to the CBI – is what brought Brown into politics.

But at the core of the speech was a conservative sentiment: "This is no time for a novice." When a Labour leader needs to be advocating big, bold changes to a broken world system, Brown was largely telling us to hunker down for the storm. Knowing that he has acquiesced with some of their dangerous dogmas himself, he won't even call the bankers and deregulators who caused this disaster "greedy" – despite once writing a pretty good book sarcastically called Let There Be Greed. His concrete proposals were terrific for their beneficiaries, but small: no prescription charges for cancer patients, nursery places for two year-olds.

If the centre-left is going to win, they need to explain that a recession is when you most need an active government on your side, fighting for you. Markets can only dependably work their wealth-generating power when they are part of a sturdy structure of regulations, redistribution, and unions. Knock away those pillars – as Cameron has advocated for his whole career – and the building falls down. A limp government offering at best a nudge is no use if you are stuck under fiscal rubble.

But where are the big proposals? How about a Green New Deal, employing a million people to insulate every loft and double-glaze every home in Britain – slashing our catastrophic carbon emissions, our dependence on Russian gas and Middle Eastern oil, and our soaring fuel bills? Why rule out a windfall tax on the bloated oil companies to pay for it? When you are 20 points behind in the polls, steady-as-she-goes with a surer smile is no answer. If Labour stays stuck this far behind, it will look like the Wil E. Coyote of politics: when you have run off a cliff, just keep running, and pretend not to notice when you begin to plummet.

It is hard to imagine Brown now advocating the populist programme Labour needs: his book on "Courage" looks like a tragic study of a quality he doesn't possess. But if Labour is going to ditch Brown, it is important to establish now the narrative of what went wrong with his premiership. The Milburn Tendency argues that the past year proves you can't ever have a successful Labour Party to the left of Tony Blair. But Brown has barely offered a programme of any kind, left or right: he has been trapped in the political headlights, failing the X-Factor. People haven't rejected his ideas, because they don't know what they are. "Moving to the left" is always presented as if it would be a disaster by glib commentators, but on all the big issues of our time, the left has been proven right: deregulation, global warming, Iraq.

Whoever leads Labour against the 1929-nostalgists has only one way of winning. Go big. Go bold. Go radical. Or you may as well go home.