Tony Blair’s advice to Ed Miliband this week is unlikely to influence the direction taken by the current leadership of the Labour Party, but it does have the merit of providing a telling insight into how New Labour wasted an unparalleled opportunity.

It is of course appropriate that the advice comes in the week of Margaret Thatcher’s death, since it may be regarded as Blair’s most recent act of homage to the departed former Prime Minister. It was always the (usually unspoken) guiding principle of the Blair government that the Thatcher legacy was too well-entrenched, and too valuable, to be challenged – and it is clear from this latest effusion that this remains the cardinal principle of Blair’s politics.

He seems not to remember that Margaret Thatcher was thrown out in 1990 by her own party or to notice that her death has revived bitter memories of the division and damage she created. For him, it seems, the whole of the Thatcherite agenda lives on.

Both then and now, however, Tony Blair commits a fundamental error in his analysis of how political opinions are formed. What he fails to recognise is that most of our fellow-citizens do not think about politics or economics in any systematic way. It is only a small minority, whatever their position on the spectrum of political views, that has developed a fully coherent set of beliefs and principles.

The majority are perfectly capable of holding in their minds quite contradictory notions and allegiances and of nodding in agreement to any one of the propositions offered from any part of the political spectrum. What matters, what determines the way they will think on any particular issue and the way they will vote, is which of those contradictory values is closest to the surface, or in other words has the greatest salience for them, at any particular time.

As we confront the various issues and challenges that are the stuff of politics – the necessary compromising of conflicting interests and the proper allocation of scarce resources, power and freedom – we will find that each of those issues and challenges can be defined and described according to competing narratives. The battle for political support and the disposition of political power will depend on which of these narratives is the most persuasive.

The challenge, therefore, and particularly for a party of the left that will usually stand for change and therefore progress, is to produce a narrative or narratives that explain difficult and complex issues most persuasively and relate them most accurately to the values that voters hold and that we espouse.

Most people in Britain will affirm, if asked, their continued belief in the values of fairness, compassion, tolerance, concern for others. But those values have become submerged under the tidal wave of free-market propaganda; if we are to rescue them, we need to find effective ways of bringing them back to life, and back to salience, by showing their relevance and value to the solution of current problems.

We do not meet this challenge by accepting Tony Blair’s advice. His response to the apparent Thatcherite hegemony, now and when he was in government, is and was to move the whole of Labour’s agenda rightwards. The values of our opponents were affirmed; the principles and policies that the voters knew were those that Labour had always stood for were abandoned.

But the voters had not moved rightwards en masse. They had, it is true, become disillusioned with some elements in Labour’s programme – elements that needed updating and re-thinking – and they had been persuaded by an effective competing narrative to support some elements in the programme of our opponents.

But for the large number of voters, of almost every political allegiance or none, who continue to embrace the values of community and compassion, the wholesale move rightwards was confusing and uncomfortable; it left Labour voters with a sense of abandonment, undecided voters with the perception that there was no real alternative to Tory extremism, and voters who would not ordinarily vote anything but Tory quite unpersuaded that New Labour was a convincing alternative.

Moreover, in politics, unforeseen events happen and circumstances change; the issue as to who has the most persuasive narrative to explain those changes is therefore constantly redefined. The Global Financial Crisis was not, as Blair argues, an event that left opinion unmoved; the voters, it may be safely asserted, were desperately keen to escape the wreckage and to find a way forward.

Their partial and now reducing adherence, in the aftermath of the crisis, to neo-liberal orthodoxy was in many ways a reflex action; a dash back to mother’s apron strings in times of danger. It will take time – years – to bring them to a realisation that the crisis was the result of market failure; but the fact that this will take time and effort is no reason to concede the whole of that issue to the Tories and to make no attempt to increase understanding of what went wrong so that we can avoid such crises in future.

The only people who might think that this is a correct response are those who believe that the Tories are right and that the whole issue was the fault of supposedly “big” government; even precious few Tories now truly believe this – but Tony Blair apparently does.

Tony Blair’s advice is, in other words, not only defeatist in electoral terms, but also a betrayal of the interests of most people. If he genuinely believes that George Osborne has got it right, then he should be honest enough to come out and say so. Otherwise, he should surely accept that his duty as an experienced political figure is to help towards learning and applying the necessary lessons.

It is significant that, in Blair’s list of seven priority issues for Ed Miliband, there is no mention of the fundamental issue of how the economy should be managed so that we escape from recession and rebuild our shattered productive sector. It is true that Tony Blair never showed much interest in economic policy and seems to have overlooked its importance; yet that is precisely where Labour should focus its efforts, both in its own – and more importantly, the country’s – interests. To take up that central challenge is not only a duty but an opportunity – to reject the canard that we have to choose between social justice on the one hand and economic efficiency on the other.

We should now argue that there is nothing economically efficient about keeping large numbers out of work, about leaving manufacturing flat on its back, about using vast amounts of money from both the taxpayer and the central bank to boost the banks’ balance sheets while both demand and investment remain depressed.

This is now our opportunity to take the argument forward on our terms. We don’t have to choose; the solution to our economic problems does not lie in piling burdens on the most vulnerable. The path to economic efficiency lies instead in creating a more inclusive and equal society in which everyone – as contributor and beneficiary – is able to share. We can develop a narrative that convincingly explains the failures and – in accordance with the values that we share with so many of our fellow-citizens – takes us forward in both social and economic terms.

Bryan Gould

12 April 2013