Progress | Centre-left Labour politics

Simply ‘more jobs and growth’ may no longer be adequate

Does the left have a plan for the next economic downturn? When it comes to thinkpieces on why the left failed to make the most out of a global crisis in 2008, supply has far outweighed demand. But eight years on, a pressing task for the Labour party should be to prepare for the next one.

That does not mean that John McDonnell should start sounding the alarm about a looming recession, which would be a political disaster. But structural, and global, economic problems are making themselves increasingly visible. For example, Robert Gordon has recently made the compelling case that the era of rapid growth is over, while Larry Summers warns of an age of secular stagnation.

Both suggest that the growth which drove innovation and social advances in the 20th century, upon which the left built the NHS and the welfare state, is unlikely to happen again. That means there will be no 21st century innovations linked to growth such as the significant 19th and 20th century advances like rail, the car and household appliances did. The upshot is that, even with the arrival of the digital revolution, the changes we see in the economy will be of degree rather than kind. Thus, growth may not come on in leaps and bounds in the way our parents and grandparents saw.

Labour should start building policies which will protect Britain against the consequences of these concerns. The left’s traditional offer is not enough, even if it is where you can find the broadest line of agreement in today’s party: that Labour relies on distribution of the proceeds of growth to make life fairer for millions.

But if this is a great unifier, it is rarely enough to propel the party into government; in fact, it can be a historic obstacle. Labour’s history is littered with names of politicians who failed where their intellectual basis relied too heavily on the assumption that from growth good things would flow.

Why does this matter at all to a party so far from an election and with no concrete evidence of another economic crisis? Alongside poor productivity numbers, this week also saw employment indicators released which should be cause for concern that Labour’s traditional approach to jobs, growth, and redistribution no longer fits with Britain’s economy.

The labour market looks increasingly weak despite headline figures. Six million workers are paid under the living wage, new job quality is poor, and household debt is rising. As the New Economics Foundation points out, underemployment is growing.

The economist Guy Standing calls this growing group of workers the ‘precariat’ whose lives are blighted by the fact that nothing is constant and they lack the community networks previously relied on by the working class. Labour speaks occasionally about these people but goes little beyond offering a promise of more hours to those on zero-hours contracts.

That is why Labour’s response to zero-hours contracts fell short of offering a template to fix the long-term problem of underemployment. It aimed to fix a problem through regulation (all but banning zero-hour contracts in their current form) that would be rapidly overcome by market forces capable of finding a way round the loss of cheap labour. As Duncan Weldon explains, a shortage of cheap labour in an age of technological advance means that businesses have two choices: either close or they will replace workers with technology. Both are uncomfortable options for centre-left parties to come to terms with.

The loss of low-paid manual work in the last century set off a long decline in many of our towns and cities, as successive Conservative governments failed to meet the challenges of post-industrial change. A similar process is under way again but Labour’s traditional route map has little to say about how to deal with it.

So, it should be welcomed that at least one Labour member of parliament is publicly embracing the debate on basic income, but there is lots more to do to build the safety nets for a precarious economy. These new safety nets should permeate every policy area in Labour’s renewal.

What would an education policy look like if our schools were more adaptable to free the underemployed, especially mothers, from the rigid demands of childcare? What does the future of labour representation look like when workers engage with platforms such as Uber or TaskRabbit, not employers? How does health and social care policy build community resilience against a repeat of the poverty and deprivation caused by the loss of industry in the 20th century?

More jobs and more growth are no longer adequate safety nets, but Labour has pretended that they are. If the loss of confidence in capitalism in 2008 was not matched by an upsurge in confidence in social democratic answers, then there is very little reason to suggest the same result cannot happen again.


Alex White is a member of Progress. He tweets @AlexWhiteUK


Photo: Policy Network

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