The Labour Party is a democratic socialist party. It says so in its rule book and on the back of every membership card. Democratic socialism is what the party believes in. But if you ask anyone what that means today, expect an uncertain response. The people’s flag may be deepest red but for the 1994–2010 New Labour period it flew from a pale grey masthead. What was therefore once distinct about the Labour Party became a matter of doubt, with even the party itself unsure what it stood for.

The uncertainty crept in well before the 2008 banking crisis exposed the limitations of New Labour’s light-touch, low-tax approach to economic management. Dealing with the credit crunch required a rapid change of stance. Labour bailed out bust banks to save the financial system from collapse and took strong fiscal and monetary steps to fight recession and get the economy growing again.

But although these measures worked, they meant big increases in government borrowing and national debt, providing the pretext for leading supporters of neoliberal economics who share an ideology of small government to implement severe public spending cuts and shrink the size of the state.

In Britain – as across the world, notably continental Europe – the left struggled to offer a coherent response, instead slipstreaming the centre-right parties in their call for huge cuts. But that just meant heading down the same austerity road at a slower pace, when (as Keynes showed in the 1930s) getting the economy back on the growth path was always a surer way to sort out the public finances.

Even before the global banking crisis, governments of the democratic left were equally hesitant in responding to, and surviving in, the new world order that followed the end of the Cold War and the development of a global economy. In Britain, New Labour took office in 1997 on a landslide vote of hope but departed in 2010 on a humiliating vote of distrust without ever really changing the basis of the system we inherited. Despite the cataclysmic failure of neoliberalism which the 2008 global banking crisis represented, it hardly incited a resurgence of democratic socialism.