Colin Hay's combative response is a welcome engagement with our ideas. Let us first set out where the battle lines are drawn. The most important points in Hay's shot across our bows relate to accommodating the notion of complexity; defining Keynesianism; invoking Labour's past; the relationship between fiscal and monetary policy; and the evidential basis for our argument.

The first point involves admitting complexity when characterizing a political economy. In essence, we agree with Hay about the need to admit complexity into the explanation and characterization of New Labour's political economy, but he does not recognize in our account that this has been successfully achieved, nor do we see it in how he characterizes the relationship between New Labour and neo-liberalism. This is in part a disagreement about how to operationalize the insight about the need to admit greater complexity into the analysis of the political economy of New Labour's macroeconomic policy making. For example, our account of complexity accepts that, under a particular set of monetary policy conditions, which are not in any straightforward sense Keynesian, it is nevertheless legitimate and useful to consider the ‘Keynesianness’ of the fiscal policy regime. Hay, by contrast, sees this as a dubious manœuvre, no doubt fuelled by the unspecified ‘normative bias’ he detects in our work and refers to enigmatically but repeatedly.

Similarly, we recognize that Hay has identified the need to admit complexity into analysis. However, in our reading of his work there remains a sense that, in the final analysis, New Labour's is a neo-liberal political economy.