John Gray has an interesting, though typically pessimistic, article on Ralph Miliband, his sons and the prospects for social democracy in the coming period in today's Guardian. He is astute, and appropriately scathing, on the failure of New Labour and of the US-led financialised capitalism that underpinned the New Labour model. I find myself less satisfied, though, by his account of Miliband's thought and of social democracy's dilemmas, and therefore of the glib 'irony' of his conclusion.

First of all, briefly, it is not strictly accurate - or rather, it is incomplete - to claim that Miliband "had always bitterly attacked" the Labour Party. He had of course criticised Labour's record in office, and Labourist ideology. He had long argued that Labour was not a socialist party, and that a socialist party was needed. But his attitude to Labour was far more complicated than Gray's summary suggests. Labourism, he wrote, was concerned above all with "the advancement of concrete demands of immediate advantage to the working class and organised labour". This accounted for the modesty of its demands, and the tendency for Labour governments to go from being adminstrations of reform to being adminstrations of conservative retrenchment. Still, the achievement of reforms advantaging the working class was not to be sniffed at, and Miliband was aware of the value of social democratic reform. "For all its limitations," he wrote, "the victory of 1945 was a great advance". He also, despite disagreements with the Labour Left, had a great deal of sympathy for them, and tried to work alongside them. He understood the necessity of socialists relating to the Labour Party, it being where most of the working class was situated.

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Secondly, on Bennism, Miliband's position was not exactly the naive one that Gray attributes to him, of believing that Benn could lead a socialist revolt and capture the Labour Party for the Left. There is an interesting story here, but it is not the one Gray tells. Miliband had long argued, as he put it in 1976, that "the belief in the effective transformation of the Labour Party into an instrument of socialist policies is the most crippling of all illusions to which socialists in Britain have been prone." ('Moving On', Socialist Register 1976) In the 1980s, it is true that in despair at the extraordinary difficulty of building support for a socialist alternative to the Labour Party, he decided that the question of whether a new generation of left-wing activists could challenge the Labour leadership was "more open" than he had previously conceded. Nonetheless, he wrote: "I have for more than ten years written that this hope of the left to transform the Labour Party - which has always been nourished by the Labour Left - was illusory ... I am far from convinced that I was mistaken." ('Socialist Advance in Britain', Socialist Register 1983).

Surely, you might say, either prospect, of forming a new socialist party out of the disintegration of Labourism (which Miliband assayed very insightfully), or of claiming Labour for the Left and driving out the right, had slim chances at that point. That is not an argument that I think Miliband would have dissented from, however. Whatever his flaws, unsophisticated utopianism was not among them. Moreover, I would say that Miliband's basic assessment that the disintegration of Labourism was long-term, and that it would eventually lead to activists in the Labour Party and in the trade union rank and file considering a wholesale political secession, was both accurate and in a way prophetic - if that isn't a polite way of saying 'premature'.

Miliband's position on Tony Benn, far from reflecting a deluded belief that he was poised to capture the big batallions of the labour movement for socialism, owed itself to the fact that Benn had extraordinary experience working at senior cabinet levels and within the state for someone on the Left. Through that experience, he had derived radical conclusions about the basic institutions of the British state and society that few of his predecessors had. Compared to Lansbury, Cripps, Bevan, or Foot, his critique of the capitalist state seemed to go much farther than most of the reformist left had ever done. Oweing to this experience and his radical conclusions, he was a natural leader of the Left.

Contrary to the impression given by Gray, it was long after the SDP split, after the right-wing had taken control of the NEC, and the leadership, after Militant had been expelled, and the miners' strike defeated, that Miliband started to look to Benn. It was not out of a delusional belief that Labour was about to become a socialist party at the height of Bennite radicalism that he began to cultivate Benn. It was in a period of right-wing hegemony when, out of his growing pessimism that a socialist alternative to Labour could be created, and his worry that Kinnock's attacks on the Labour left would farther reduce the scope for socialist agitation in the UK, he sought to draw Benn into a sort of unofficial national leadership role for the Left. In fact, he did not encourage Benn to try to take control of Labour, regretted his running for the shadow cabinet and strongly advised him not to run against Kinnock in 1988 - advice that Benn ignored.

Miliband's collaboration with Tony Benn is thus interesting less because it signals illusions in the Labour Party than because it signals disillusionment in his other major project of building a left-of-Labour alternative. I think this was the inevitable result of Miliband's relative isolation. That may seem like an odd thing to say about someone who was constantly organising conferences, polemicising, intervening in debates, lecturing, and so on. Yet, strangely for a figure whose analysis was so geared to socialist strategy, intelligently assessing the resources and class capacities available to the Left, and figuring out possible paths for future development, Miliband never put applied his insights inside any organisation. He was of the 'independent Left', which meant that in his particular views he was sometimes in a party of one. He never felt he could join any party - not the Labour Party, not the IMG, not the SWP.

A marxist intellectual without a party is not necessarily a marxist disarmed, but such a person will in practise either orient himself to existing currents that he is in principle opposed to, or retreat into arid theory or utopianism. An individual of Miliband's tremendous talents could resist the gravitational pull of larger social forces to some extent, but not completely. Unable to persuade sufficient numbers to build a new socialist party to replace Labour, unwilling to join the small revolutionary parties, in practise Miliband navigated between the academics around the New Left Review and the Labour Left. This isn't a terrible space to occupy, but it does seem a shame that Miliband's organisational gifts were squandered on a premature attempt to build a left-of-Labour vehicle to hegemonise the organised working class, and then on the possibility, which he knew to be distant, that socialists in the Labour Party might eventually be able push the question and eventually refound it on different principles.

By the end of the 1980s, he was no longer convinced that capturing Labour was even a remote possibility. He continued to be friends with Benn, but he saw that the 'long run' was going to be even longer than he had conceived, that the decline of the Left would continue, and that the 'new realists' around Kinnock and the TUC bureaucracy would hold the rank and file in check. Unlike his sons, of course, he did not consider that this was a good enough reason to actually join Kinnock and the Labour right.

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Thirdly, Gray is even wider from the mark when he suggests that Miliband did not notice the ascendancy of the radical free market right, the failing fortunes of the socialist Left, and the fundamental changes in capitalism that took place in the twenty years before his death in 1994. Remarking on Miliband's lifelong socialism, he says that "it was capitalism that proved to be the revolutionary force in the late 20th century, consigning socialism to the memory hole". But Miliband, having no illusions in 'democratic socialism' and few in the USSR, had no reason to expect that either of these two major poles of attraction on the socialist Left were destined for any fate other than the memory hole. His brief, as he saw it, was to help reconstitute a more adequate socialism that was equipped to withstand the domesticating pressures of capitalist democracy.

If Miliband was ultimately unsuccessful in this mission, he was not deluded about the impact that the collapse of Labourism and Stalinism would have on the Left as a whole. Miliband's private thoughts, (recorded in Michael Newman, Ralph Miliband and the politics of the New Left, 2002), tend to concur with his public writings on this point. While in the mid-1970s amid powerful labour militancy, he saw opportunities for fundamental political realignment, by the time of the early 1980s and the political success of Thatcherism, he was less sanguine. In 1982, he was privately of the view that the Left was in a "terrible mess". In 1983, he was publicly of the view that Labour's defeat was "a major defeat not only for the Labour Party but for all socialist forces", and reflected "the most dramatic manifestation of a deep-seated, long-term crisis, for which no immediate remedy is at hand". Worse, it had conferred "a new legitimacy upon an exceptionally reactionary Conservative government".

As to the nature of this reaction, writing with Leo Panitch ('Socialists and the 'New Conservatism'', Socialist Register 1987) he noted its "major success" in shifting "political debate much farther to the right" so that much that was taken for granted in the post-war era was now being "powerfully and effectively challenged". He gave witness to the defeat of Bennism in Britain and the retreat from the Common Programme in France, both demonstrating the resilience of right-wing social democracy against left-wing attempts to supercede it, even as social democracy was itself increasingly reliant on conservative solutions to economic crisis. Above all, he stressed, the 'new conservatism' enjoyed much of its success because of the detumescence of the radical Left, itself the result of the failures of social democracy upon which too many socialists had pinned their hopes. Conservative retrenchment, and socialist retreat, was not blithely ignored by the elder Miliband in a hasty conversion to socialist Labourism - rather it was part of the perspective that led to him increasingly seeking allies in Labour itself.

In support of his case, lastly, Gray cites the fate of the USSR as a decisive point against Miliband's socialist faith. Miliband's own (highly ambivalent) attitude to the collapse of the Soviet Union is instructive here. He saw that at one level it would be a victory for the free marketeers, and knew what that meant for the foreseeable future. He visited Czechoslovakia and was very depressed to see privatization in action. But he also celebrated that a great weight had been lifted from the shoulders of socialists, that being the burden of 'actually existing socialism' which he insisted was at best a monstrous "perversion" of the socialist idea. Miliband never entirely broke with the idea that the USSR represented some kind of socialism, which he had held from his early days as a Communist Party member. Indeed, he was initially uneasy about the force with which some in the New Left denounced the USSR and the so-called People's Democracies. For that reason, EP Thompson accused him of being 'soft' on Stalinism. But this sympathy more and more became opposition in later years. He supported dissidents in Eastern Europe, and criticised Soviet adventurism in Afghanistan. The "immensity of evil" that Stalinism represented convinced him that the whole idea of a socialism that was both undemocratic and inegalitarian was preposterous and perverse. The formula he came to prefer when assessing the USSR was that it was 'oligarchic collectivist'.

Miliband did have a soft spot for Gorbachev, whom he believed had recognised that socialism needed democracy. However, he saw the demise of the USSR coming, believing that whatever Gorbachev's intentions he would be quickly pushed aside by opportunists, and any chance for a democratic socialism would be crushed. And given his disillusionment in the USSR as a bastion of socialism, his failure to shed tears at its downfall is perfectly reasonable. On the prospects for reviving socialism after the USSR, he wrote: "I am not a Pangloss, but I do think there is more going on than meets the eye, and that the opposition will make itself felt." I think he is vindicated in this. Although there is a hell of a long way to go in reconstructing the Left, the germinal revival of systemic critique with the anticapitalist movements and the global rebellion since 2003 against the very US hegemony that was consolidated with the fall of the USSR, do constitute opposition making itself felt. And I am convinced that we will see it more often, and feel it more deeply, than we have until now.

If Miliband tended to foreground his optimism, it was sober optimism, and he was also alert to the dangers of a climate where socialism was off the agenda. As he wrote in Socialism for a Sceptical Age, his last book, the political and intellectual reaction in the West that was strengthened by the USSR's collapse "plays its own part in creating a climate of thought which contributes to the flowering of poisonous weeds in the capitalist jungle—weeds whose names have already been noted—racism, sexism, xenophobia, anti-Semitism, ethnic hatreds, fundamentalism, intolerance. The absence from the political culture of the rational alternative which socialism represents helps the growth of reactionary movements which encompass and live off these pathologies and which manipulate them for their own purposes." The return of fascism as a serious electoral option in parts of Europe, the growth of xenophobic street gangs, and genuinely terrifying pogroms in Italy and Hungary, shows that Miliband was not exaggerating.

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The difference between Gray and Miliband is that the latter was a socialist, and was always concerned with a scrupulous assessment of class forces and particularly the structural capacity of the working class to assert its interests. This is not to assent to Gray's caricature of Miliband as someone who was unaware of the fact that "politics is driven by far more than class conflict", much less as someone who failed to notice that the "interests of capitalists are often at odds". No one who had actually read the texts cited by Gray - Parliamentary Socialism, and The State in Capitalist Society - could have made that mistake. But it is to say that as a socialist, he was first and foremost interested in what forces the exploited and oppressed had at their disposal, and particularly how robust the working class's organisational capacities were. His assessment of whether social democracy would survive a worldwide systemic crisis, or even give way to more radical alternatives, would be shaped first by his view of how well placed the working class was to resist the incursions of capital, and secondly by his assessment of the institutional capacities of the Left.

For Gray, of course, this is not even an issue. The only real agencies are global capital, and the hopelessly inadequate representatives of social democracy fighting a rearguard action to defend the welfare state against capital's demands for austerity. Though he speaks of "class conflict", I'm not convinced that the whole idea, inasmuch as he grasps it at all, isn't faintly ridiculous for him. Similarly, the "Marxian insight" that capitalism is inherently unstable, constantly mutating and volatile could just as well be an "Austrian insight" or a "Schumpeterian insight". Because he refers to marxism doesn't necessarily mean that he means the same thing as most marxists do by it. The story, as far as Gray is concerned, is of one revolutionary utopian movement, socialism, being overtaken and diplaced by another, the 'false dawn' of neoliberal capitalism. In that light, it is easy to condescend to Miliband a little, and appropriate some of his more convenient critique, now that his dangerous utopian ideas are harmlessly consigned to the memory hole. Unfortunately, that means that the Milibandism which young Labourites should be reading up on, even as they're sticking up 'twibbons' advertising young Edward, has been somewhat mangled and traduced in the process. Which, as I say, undermines an otherwise savvy critique of our New Labour ex-overlords.

The ConDem government yesterday followed up previous cuts announcements with further cuts of £2bn and a shelving of planned projects worth £8.5bn, adding a total of £10.5bn to the initial £6bn worth of cuts. The dopy-looking Liberal treasury secretary Danny Alexander was sent before the cameras to cop the heat for this.

There should, you would think, be no discomfort in this for a party that is led by its most unashamedly neoliberal faction, a faction that in some respects has pushed the Tories to the right. And at the moment, the polls suggest that the propaganda campaign is winning. Most voters are willing to blame the last government for the budget cuts, thus suggesting that the narrative of profligate Labour spending causing the deficit has successfully framed the debate for the time being. This is not to say that people favour cuts - the polls also register real worry about how deep the cuts will go, and how rapidly they will be introduced. The aggressive Tory agenda now being imposed was overwhelmingly rejected at the polls. But it's hard to turn on the television or open a newspaper without being advised in alarmist, hysterical tones that there is no money, and it's all the fault of public sector fat cats. However, in the long term, there is a real problem for the Liberals in being seen as part of a government of right-wing millionaires cutting spending for the poor. And some of the previously announced spending reductions hit the working class hard. Cuts in housing expenditure, in free school meals for the poor, and in childcare. The latest cuts hit job creation schemes, infrastructural projects, hospital construction and development. And, of course, it's just the beginning.

The economic logic of the cuts has been distilled for us into a few mantras: we need confidence in the markets; we need a balanced budget; and we need growth led by the private sector. But if anyone's buying this, they won't be in the highly probable event of its resulting in a deflationary spiral. There is no urgent need to pay off the deficit, and doing so at this time and in this way is econocide. As Tim Binding points out, the logical thing to do from a point of view of securing growth would be to redistribute wealth. Well - the cuts do redistribute wealth, but in the wrong direction. The budget cuts are a class project, not a programme for economic revival. Call me a blithe optimist, but I don't think it will be long before this becomes glaringly apparent to the vast majority of people. I give it a few months, though this would not by my first incautious prediction this year. Which raises some questions for the stability of the ruling coalition.

The Liberals, already down 10% in the polls on their pre-election standing, and sometimes as much as 5% below the votes they polled on 6th May, should lose heavily from this. They have benefitted from a surge in support for 'third party' candidates, rising to levels last seen in the 1920s, but their voters have never been a Thatcherite bloc. Ross McKibbin describes the Liberal vote as the least regionally concentrated of the parties, a source of weakness for them in the current electoral system, but this reflects a geography of class, as the Liberals are the only party to have a genuinely cross-class electoral base. They could now lose whatever gains they made in working class, previously Labour heartlands. The C2 vote, usually characterised as the "skilled working class" - really a section of the skilled working class - gravitated away from Labour in various directions, giving both the Liberals and the Tories some of their gains in the last election. But that is not a loyal voting base, and a shift in that vote as the cuts exact their toll is likely to continue to squeeze the Liberals. The Tories may not lose as much, as they could make up whatever they lose in C2 votes with a gain in the AB votes lost to Labour for a decade or so. But their support in the election was only 37%, and it would only take a small shift in votes to give the plurality back to Labour.

This is one reason why business, the banks and the civil service dreaded the prospect of a minority government having to implement cuts and then face re-election in 6-18 months, and why the civil service elite moved to change the rules of the game. Susan Watkins explains:

To the despair of election-night commentators, the May 6 count produced no uniform pattern. ... Britain awoke on May 7 to the likelihood of a weak Tory government and a return to the polls by 2012.

With protests raging in Greece against the PASOK austerity measures, and acrimonious disarray among European governments on how to deal with Eurozone banks’ imbrication in the looming sovereign-debt crises, this was not an outcome Whitehall or the City of London wished to see. ... Austerity measures had been delayed until the May 2010 election was out of the way. The prospect of a minority government, battling to push through closures and redundancies under the shadow of further popular reckoning, was not one that Britain’s rulers could contemplate with equanimity.

Within five days that prospect had been ruled out of court. As a Financial Times report explained: ‘The Cabinet Secretary has positioned the civil service to take maximum advantage of the political uncertainty’. The House of Commons was suspended, on the basis of a draft constitutional handbook which mps had not been permitted to debate, while teams of functionaries helped to coach party leaders towards a mutually beneficial outcome. The next election would be delayed until 2015, with the instant introduction of fixed, five-year parliamentary terms. The majority needed for a no-confidence vote in Parliament would be raised to 55 per cent. Conservative and Liberal Democrat manifestos were elided into a single statement, with a pledge of future referenda to broker the two key areas of difference: electoral reform and further EU treaties. On 12 May, Cameron explained to the waiting press corps that he and Liberal Democrat leader Nick Clegg had come to realize, over the course of the negotiations, that the idea of a minority Tory government was ‘just so uninspired’. The Lib–Con coalition government, announced by the two youthful, telegenic party leaders in the sunshine of the Downing Street garden—‘just like a wedding’—was greeted with almost universal applause. The Financial Times: ‘A seamless transfer of power—a good week for the pragmatism and commonsense of the British constitution.’ The Economist: ‘The best possible outcome, given the ropey electoral numbers—we welcome it.’ The Guardian: ‘The public seem pleased with the coalition . . . This is surely the right response.’

That the "pragmatism and common sense of the British constitution" should come to the rescue of capital, saving it from "ropey electoral numbers" and the unimpressive ambivalence of the British public, should be no surprise to readers of Ralph Miliband. But though the constitutional fix is an important prophylactic, it is no guarantee that the government will not fall. The state, used to decades of stability, has not had to wage a protracted fight with the working class for a generation. The ruling class is far more fractious than it has been for years, lacks the ideological coherence and leadership it possessed when it last had a fight of this magnitude on its hands. It may well be somewhat out of shape.

The struggles that now ensue will inevitably play out to a considerable extent inside the Labour Party. The public sector workers are the bedrock of Labour support. The public sector unions bailed them out to a great extent in the recent election. That wasn't unanimous or wholehearted. The PCS, which has been in battle with the Labour government for a decade, has never been affiliated to the party, and its political fund is not set aside for the Labour Party. The RMT was of course expelled, and the FBU disaffiliated. There has been loud grumbling in other unions like the CWU. But by and large, public sector workers remain Labour, and they are the ones who are going to be in the frontline of the cuts, and the fightback. This has two key implications. The first is that union leaders may, to avoid embarrassing the Labour leadership and keep their powder dry to help 'their' party back into government, try to keep a lid on strikes and protests. They will certainly act as a conservative force. That does not mean that they can be bypassed, or that they should be treated as an 'enemy' on a par with the bosses. But you don't have to be Dave Spart to see a potential problem here.

The second implication is that if rank and file militancy pushes the union leaders to the left, it is likely to pressure the Labour leadership from the left as well. Diane Abbot is the only left-wing candidate for the leadership. She is the only candidate who can be relied on to consistently oppose the cuts, and she has more credibility in doing so than the Milibands, Balls or Burnham. Abbott is unlikely to win, but she has good name recognition, is popular with the public and constituency Labour members, and is getting some decent play in Labour's daily tabloid, The Mirror. She doesn't have the campaigning record of John McDonnell, who has real support in the trade union movement, but she's on the right side of most arguments, and there is some anecdotal evidence that she has shifted the leadership debate to the Left. Given that Abbott is a member of the Campaign Group and is seen by the Blairites as a relic of the hard Left they spent the 1980s and 1990s trying to crush, the fact that they have to adapt to her somewhat is not an insignificant development.

At any rate, whichever one of the disgusting New Labour quad actually wins the leadership, they are all aware of how much they depend on the organised labour movement, and of the need to solidify their standing in working class communities. They will try to resolve this in the most reactionary way possible, say through immigrant-bashing and authoritarian populism on 'anti-social behaviour'. But that relationship of dependency will make it very difficult for them to ignore any struggles that take place. And it does mean that Labour members and supporters will be at the heart of any cuts campaign, and that anyone who thinks they can ignore or bypass the Labour party is deluding themselves. Not that you should join the ranks of lefties flooding back to Labour - it's not an empowering experience. But just don't imagine that the resistance to the cuts will take place without the central involvement of the Labour Party, for all the problems and opportunities that presents. I would infer that this also means that in electoral terms the coming period will see a consolidation of Labour's working class vote, and fewer opportunities for left-of-Labour campaigns.

A first step toward building the anti-cuts campaign will be the budget day protests next week. Large, confident protests will disrupt the inevitable attempt to present the cuts as some sort of consensual process with a democratic mandate, so do attend wherever you can.