I have just returned from the British Labour Party’s annual conference. It was a sobering affair. Gordon Brown and his ministers are trying to start a ‘fight back’ against the Conservatives who, at the start of the week, held a commanding lead in the opinion polls. This is a tough ask. Any party that has been in power for 12 years finds a fourth election win difficult.

But New Labour has failed to break with the free market fundamentalism of the neoliberal era just when the dominant theory and practice of the last three decades has never been so found wanting. Here in Britain we have ended up in the frustrating scenario where the right and financialised capitalism are calling for public spending cuts because of the economic crisis their greed caused and the light touch regulation they demanded. Somehow the ideological cycle and the electoral cycle are way out of synch.

Little of substance changed at Labour’s conference. There was a move to curtail bankers bonuses but that had been decided the week before at the G20 and, it is reported, against the wishes of the British government. New Labour still thinks that the City is the goose that lays the golden egg and gives Britain a comparative advantage over other economies. So it was left to Sarkozy and Merkel to push for the more effective regulation of the bankers. The right showing the ‘left’ what to do.

There were three important things that didn’t happen at the conference. First there was no real conversation about Europe and how we can rebuild a Social Europe. New Labour was only ever interested in partnering with people in other countries who thought and acted like they did. The challenge was to build a New Britain and not a New Europe; a Britain that could compete and defeat the rest. The global economy was something to be accommodated to rather than shaped to meet social needs.

Second, and linked, there was no conversation about the disastrous German election results on Sunday night. For the once mighty SPD to slip to 23% of the vote is calamitous. But German social democrats, it would seem, are paying the price for following too closely the third way or new middle politics of the 1990s and consequently feeling that they had to be part of the grand coalition; through which they lost their identity and were exposed to the rise of the Left Party and reviving Greens.

The third thing that didn’t happen in Brighton was a declaration that there wouldn’t be a referendum on the election day to shift to a proportional voting system. There were at least three good reasons to do this; first it would have exposed the Conservatives as the party of the status quo and not change; second it would have taken Britain towards a consensual continental model of politics, that leads as Jonathan Hopkins of the LSE has written, to a more equal society, not least because it stops British politics being skewed towards a handful of floating voters in marginal seats who can’t decide if they are Labour or Tory; and third it would have been right. First past the post is simply unfair as it gives disproportionate power to party’s getting only 30-40% of the vote.

But the stakes on flunking a referendum could be more than just one lost election; it could mean the last Labour government. Not only is David Cameron more likely to win a general election without a referendum on the same day because its presence would have helped rebuild a progressive coalition, but if he gets in his presence is more likely to encourage Scottish independence with the loss of more Labour seats and he is pledged to both cut the number of MPs at Westminster and reform party funding. Any Labour revival will be further undermined.

Of course PR is not a panacea and I’m sure the SPD would rather not have the electoral competition it allows from the Left Party. But democracy and socialism are too sides of the same coin. We have to win majorities for what we believe and New Labour has lived by the distorting hand of an unfair electoral system that gives too much power to too few people – including the likes of Rupert Murdoch. As a consequence it has been in office for 12 years but has done too little with the power it had. Labour’s reinvention in Britain; and the re-invention of social democracy across Europe will only come with the radical democratisation of society and the economy.

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