The master-key that Gordon keeps hidden in his attic

Behind the prudence, Labour has kept faith with Keynes, argues Ian Aitken
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MY 35-YEAR sentence in the press gallery of the House of Commons was served under a succession of different prison governors. It started with two years of "middle way" Conservatism, first under Macmillan and then under Home. That was followed by six years of Wilsonian pragmatism, succeeded in turn by a brief taste of Ted Heath's Tory corporatism. Then came a slightly bedraggled re-run of Wilson, rounded off by Jim ("steady as she goes") Callaghan.

But rather more than half of my term was served under Margaret Thatcher and John Major. Between the two of them, they accounted for no less than 18 unbroken years of Tory rule. Added together, it means that I experienced 25 years of Conservative government, interrupted by just 10 years of Labour.

That is an awesome statistic for a single career, and a salutary reminder of just how remarkable Tony Blair's achievement was in May last year. But it also accounts for a curious personal quirk which I have noticed in myself whenever I switch on the television to watch Prime Minister's Questions from - as they say - the comfort of my own armchair. No matter how often I do it, I still can't get over my surprise at seeing the Labour MPs sitting on the benches to the right of Madam Speaker, and the Tories sitting on her left-hand side.

True, one can reconcile oneself to it after the first few minutes. But the sense of astonishment is revived as soon as Dennis Skinner rises from what I still regard as Ted Heath's seat below the gangway (indeed, it was Winston Churchill's seat when I first arrived at Westminster) to put a question to a prime minister who is sitting on the same side of the House. It simply doesn't seem natural, even a year and a half into the new regime.

This may just be a reflection of my advancing years, and the consequent ossification of my thought processes. I cannot deny that I am Old Labour in my sympathies, and may therefore be stuck in a groove just like a needle in a scratchy vinyl gramophone record. But there are extenuating circumstances: my inability to become accustomed to New Labour's new reality is at least helped along by what the two front benches appear to be saying.

Listen. Is that a Labour prime minister talking about prudence and caution in the running of the economy, and scornfully dismissing the idea that his government should intervene to save Britain's ailing manufacturing industry? Can this be a Conservative leader of the Opposition ranting about the need to "do something" to avert an economic downturn allegedly created by this same prudence and caution? What is happening here? Has everything been turned upside-down?

Well, up to a point it clearly has, at any rate on the Labour side. Certainly Karl Marx is out - in so far as he was ever really in among traditional Labourites. Marxism, and its concept of the clash of interest between the owners of capital and their employees, isn't just out of fashion - it has been buried with a stake through its heart. Rather than seeking an economic revolution in favour of the poor, we are now invited to pursue a constitutional revolution. Inscribed on our banner is the promise of lots of proportionally elected talking shops up and down the country, and an upper house of parliament from which hereditary peers have been expelled in favour of placement. In the economy, we seek partnership rather than conflict between employers and workers, even when the former want to cut the pay of the latter.

Meanwhile, the fate of John Maynard Keynes, the non-socialist economist whose ideas frequently duplicated those of Marx (though with the declared aim of preserving capitalism rather than destroying it), is more problematical. Just as a mention of Disraeli by a Tory speaker during the Thatcher years marked him as an unrepentant "wet", and therefore not "one of us", any reference to Keynes by a Labour speaker has become a coded expression of dissent from New Labour's apparent conversion to the free market. Never mind that Keynesianism formed the basis of the post-war settlement, and brought us 30 years of unprecedented prosperity - his is not a name to be bandied about lightly in Blairite circles. Not, at any rate, if you are anxious to get on in any way.

And yet Keynes and Keynesianism still retain a shadowy, if unacknowledged foothold within the Labour cabinet. The good news is that Gordon Brown, for all his expressions of devotion to prudence, is covertly operating a public spending policy of which Keynes would certainly have approved. It may be that his Downing Street neighbour hasn't noticed, but their joint insistence on pressing ahead with Brown's spending plans for health and education is undercover Keynesianism of the plainest kind. Spending pounds 40bn in spite of a slowdown in the economy may or may not please prudence, but it sure as hell is counter-cyclical.

And here it is worth pointing out that the apparent upside-downness of the political confrontation at Westminster is really an illusion. What Blair says from his unexpected position on the Treasury bench is mostly rhetoric, devoid not only of practical content but also (as David Marquand pointed out this week) of ideological content too. It would be no surprise to discover that Blair endorses the eventual merger of New Labour and the Lib-Dems, which his election-winning whizz kid Philip Gould seemed to be recommending in the Independent last Thursday. But whatever else may be true, the one thing which is clear from everything Blair says is that he isn't a Tory.

William Hague, on the other hand, very definitely is a Tory, and a hard- line one at that. For what he is actually demanding when he calls on the Prime Minister to "do something" about the state of the economy isn't some benign return to Keynesian interventionism. What he wants is a return to the stark monetarism of Mrs Thatcher and her Chicago School gurus. He is urging the Government to respond to the coming crisis by slashing public spending - exactly what the Macdonald government did back in 1931, with such calamitous consequences for this country and for the rest of the world.

Perhaps the only good thing to come out of the nightmare of the 1930s was that it persuaded the Labour Party of Clement Attlee, Hugh Dalton and Stafford Cripps to adopt both the diagnosis and the prescription expounded by Keynes in his General Theory, and that those ideas then became the received wisdom of economists throughout the world. Until quite recently, most economically literate politicians firmly believed that there could be no repetition of 1929 and 1931, for the simple reason that Keynes had taught us how to avert it. It took such great thinkers as Margaret Thatcher and Ronald Reagan to put a stop to that simplistic view.

For a while it looked as if New Labour really had swallowed the poisoned chalice of Thatcherite monetarism. But so long as Gordon Brown defies the monetarists and sticks to his spending plans I will continue to believe that JM Keynes is alive and well in the upstairs attic of Number 11 - albeit with a bag over his head.