If and when Labour loses the May 2010 election, they will be in even greater turmoil. The Old Labour dream died with Thatcher. The New Labour vision has been ailing for a while, but this time its death was self inflicted. What comes next?

Clearly, the leader will change. Who might win is a matter of mere speculation, since there seems to be a shortage of good candidates. Whoever it is could well find that Old Labour will rebound internally, shifting the party to the left, and back to its old ways. In opposition (perhaps still the largest party) they will focus their efforts on attacking those Conservative measures which cut spending, reduce debt, and try to rebuild.

This approach might bring short-term rewards, and perhaps the difficulties the Conservatives must face will keep Labour alive. Such an approach is inadequate, however, as a long-term strategy.  After the mess in which they left the nation, they must redefine their brand, as the Conservatives did. Like them, they cannot just rely on their core support. They must become Newer New Labour. They must break the confining chains of socialism, and recognize that free markets are the best way to advance the interests of ordinary people.

In practical terms, Labour could never become a true party of the free market; it would tear them apart. What  they could do, however, is to take a more Scandinavian approach, treading down the road of social democracy. It would reduce their chances of obliteration; it would give them room to differentiate; and it would allow them to espouse a positive vision. Moving towards the free market need not be taxing because in practice it spreads benefits to far more than the ‘evil’ entrepreneurs – those who generate the wealth and enlarge the economic cake for the benefit of all. Radical policies such as flat taxes, school vouchers, and restoring civil liberties, all bring benefits and choices to lower income groups, and there is a rich mine of votes to be tapped by the party that embraces such ideas.

Frankly, Labour has dissipated all their goodwill, and done little of late to merit sympathy. Now the choice before them is stark, and will be even starker if the electorate react as expected. It is that they must change or die. They had that choice late last century and they chose to change. Can they do it again?