Labour needs the right economic project
In his conference speech in Brighton, Jeremy Corbyn stated that it is not enough for Labour to be ready for an election, but that ‘we must be government-ready too. Our aspirations matched by our competence.’ This one statement identifies precisely Labour’s dilemma. An energetic general election campaign can win a few more parliamentary seats, but to form a majority government requires an overall impression of competence, stature, maturity and energy. Labour is not there yet, which goes some way to explain why we fell 60 seats, and nearly a million votes short, of a terrible Conservative campaign with a disastrous Tory leader. This competence will gain even great focus when Labour, led by Corbyn, is the frontrunner whenever an election is called.
Competence to govern rests, not on eye-catching policies, populist slogans or snappy soundbites, but ultimately on national security and economic credibility. Progress has long argued that Labour needs more than economic policies, it needs an economic project. This means two things: one, that voters believe that Labour will run the economy fairly and efficiently, without violent shocks or sudden surprises. Not messing it up is the public’s minimum demand from their government. But an economic project means more than this. It also requires a sense of mission, a trajectory, a vision.
On the revisionist wing of the Labour party, in common with our colleagues across Europe, we see tackling inequality as central to our economic project. We want to tackle the immediate, harsh impacts of inequality such as child poverty or homelessness. And we want to narrow the gap – both incomes and assets – between rich and poor in our society by widening opportunities, giving greater access to ownership, and redistributing wealth and power, in the knowledge that more equal societies have better public health, lower crime rates and higher levels of well-being.
An egalitarian economic project needs the practical levers to make it work, and redistributive tax systems, fair welfare systems, and investment in regional development, infrastructure projects, and education and training are proven to work. So far, so good. Then Corbyn in Brighton said something else significant, that Labour would ‘not simply to redistribute within a system that isn’t delivering for most people, but to transform that system.’
We agree, but our concern is that by ‘transform’, the Corbyn project simply means ‘nationalise’. If Labour falls into the trap of a single transferrable policy solution to every economic and social ill, then any hard-won sense of economic competence will soon be replaced by a belief that we are ideologues, imposing a dogma, rather than progressives seeking to make your life better. The fabled 2017 manifesto was heavy on nationalisation and middle-class giveaways and light on meaningful transfer of wealth and opportunity – it did not even plan to reverse the government’s pernicious benefits cap let alone reinstate asset-based welfare like child trust funds.
If Labour believes it is better to have civil servants managing the water companies, then we need to explain how this will deliver a better service, lower prices, and how the state will replace the investment which currently comes from private companies.
The next Labour government will need a thriving business sector as the engine of the economy. Businesses seek profits. Their owners seek rewards. The incentive to make money is what drives innovation and improvements in their products. Competition is what drives down prices and delivers better service. These are the simple truths of a market economy. We cannot ignore these realities or wish them away.
Our economic project, driven by our desire for greater equality, needs resources. Governments do not create wealth, people do – both worker and investor. For Britain to prosper post-Brexit, we need businesses, from the mighty global corporations, to the hipster start-ups, to see Britain as a good place to invest. To fund our schools, roads, police and hospitals we need businesses to create wealth and jobs, and to pay their fair share in tax. The next Labour government therefore needs a healthy, not a hostile, relationship with business in all its forms. Most British workers work in the private sector, for companies that are driven by the profit motive. Profit is not a dirty word to be hissed at like a pantomime villain; it means success.
Does this mean that we believe in laissez-faire, or that we agree with Milton Friedman that ‘the business of business is business’? Of course not. Tory governments have shown us over and over the damage that free market dogma does to society. We agree with Alison McGovern, who told the Progressive Britain podcast last month that ‘untrammelled, unregulated free markets are not equal societies where everyone has the chance to succeed’.
We believe that businesses must be good corporate citizens. We want to close tax loopholes, such as the £6bn gap created when the Tories allowed non-doms to dodge capital gains tax on commercial property sales, as Stella Creasy has argued. We want to reform company law, and make directors accountable for their decisions. We want to reform markets where they plainly fail. And as Wes Streeting argues on the pages inside, we should be careful of those seen as ‘too big to fail’. Progressives understand that markets make great servants, but poor masters. Most of all, we want an economy anchored on modern, innovative, efficient businesses, creating stimulating and rewarding jobs and opportunities, and contributing to our society through a fair, efficient and transparent tax system. We even believe that business can be part of bringing this good society about.
The economy is changing, fast. We are living through a revolution in technology as profound as any in human history. It will change the way we work, play and live.
The new revolutionaries are entrepreneurs, inventors and innovators – not politicians. Politics, especially on the left, is playing catch-up. We are going to need more than simplistic solutions and slogans if we are to earn the credibility Corbyn says he seeks. An economic project needs slogans, but slogans do not add up to an economic project.
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