The day after the announcement of the Coalition I sat down to work through the nature of the surprise. I argued that while the Tories were back in No 10 the coalition meant more than just the very welcome addition of a Freedom Act that would deliver many of the demands that were brought together by the Convention on Modern Liberty. In particular, David Cameron was reshaping Conservatism back towards its one-nation tradition and abandoning Thatcherism, hence my title 'The End of Thatcherism'. The article was widely read and generated a lot of opposition, explicit and private. Perhaps I should have emphasised more that I meant political Thatcherism and the nature of the alliances the Tories would seek, as Coalition replaced Conviction as their branding.
What will happen in terms of the economy and the fate of neo-liberalism is too early to say. Leaving aside the broken influence of the Trade Union movement that makes a further assault upon them otiose, the challenge to the system does not come from wage demands or organised labour but from the City itself, the home of Thatcher's 'Big Bang'. (These points are well made from their respective Gramscian and republican perspectives by Mike Rustin and Stuart White.)
But while the left was arguing about what went wrong under New Labour, not least what the candidates for the leadership are nervously calling its "appearance" of being too close to the bankers, what was immediately apparent was that Cameron was getting something right - setting out on a path that would claim support across all sectors of the electorate.
In one afternoon's work the Tory leadership achieved a further decisive modernisation of its image. The British state also no longer appears as authoritarian but as supremely flexible and self-critical.
It's a judgement reinforced by Mick Fealty on Slugger O'Toole reporting on "The day David Cameron became more than a Tory leader…"
It may be that Cameron simply equaled the kind of statement that Blair would have made (whose positive contribution to British and Irish life thanks to the Good Friday Agreement should not be begrudged or underestimated, even if it was delivered by Jonathan Powell as Blair's follow-through was always lazy).
But this is the point, the Tories now consciously occupy the terrain of inclusion not polarisation - not by accident but by design.
As if to prove this point, they announced the composition and terms of reference of a Commission into UK banking to report by September next year with a sweeping remit and fiercely independent-minded members like Martin Wolf. This morning, on the BBC's Radio 4 Today programme, Will Hutton, himself a Labour supporter who is nonetheless investigating public sector pay for the government, was bursting with frustration at the fact this this was just the sort of initiative that Labour "should have done but didn't".
David Edgar complains in the LRB that
The organisers of last year’s Convention on Modern Liberty are able to hail the programme of this Conservative-dominated government as a triumph.
He thinks we shouldn't do so because the aim of the Coalition is to dismantle not only the welfare state but the whole post-war settlement including even, apparently, universal franchise. For my part I certainly hailed one part of the Coalition's agreement. Nor, clearly, do I think Cameron and Clegg wish to out-Thatcher Thatcher and totally dismantle the welfare state. I'm sure that the Lib Dems would revolt if they did.
What I also argued was that, in contrast to their policies on modern liberty, on democracy and political reform there are profound tensions in the Coalition between Clegg who has attacked a "rotten system" and Cameron who is, well, conservative. Already there seem to have been differences between them over the critical issue of the timing of the referendum on AV. Clearly, if Clegg wants to win it, it should be held next May with the local elections helping to boost turnout and before the freshness and momentum of the Coalition runs onto the rocks of the cuts and growing unemployment. Cameron, equally understandably, wants to postpone it as long as possible and then hold it as a stand-alone exercise, with the media encouraged to trade on public indifference and populist, anti-politics sentiment, to ensure a low turnout and a high 'no' vote.
But if AV is rejected and this then destroys the Coalition, as the Lib Dems feel humiliated, it will nonetheless still leave Cameron holding the middle ground. He will be legislating against reckless bankers and lowering the inequalities in public-sector pay, as he builds a Tory state that is "flexible and self-critical" rather than authoritarian. There is no sign at all that the candidates for the Labour leadership understand what they are up against.