Ten years after the financial crisis we are finally starting to see coherent economic thinking which looks at alternatives — and equally importantly, thinking which recognises that our economic model’s problems are not just a smattering of minor issues.
The recently released ‘Prosperity and Justice’ report from the IPPR is an extremely serious alternative to the part laissez-faire, part cronyist economic model which has dominated for decades. It’s a sign that progressives and social democrats, at least in some quarters, are eager for a break with the economic agenda of the New Right, and have come to realise that cautious, modest tweaks to our economic model won’t be enough.
The report, which was produced by a commission which included Archbishop Welby and leading financier Helena Morrissey has produced a slew of policies with a sense of equity and redistribution at their heart. They include proposals for both a UK real living wage and a London living wage, a singular, unified income tax (rather than a lower rate for investment income), a 20% pay premium for workers on zero hour contracts and the replacement of inheritance tax with a gifts tax. The last proposal closely resembling the ‘74-’79 Labour government’s capital transfers tax, a particularly welcome idea given its potential to curb the UK’s profound hereditary wealth inequality.
Overall, the proposals can only be welcomed. But it also raises questions for those of us on the Labour Left, or aligned with it and its programme, of what economic justice actually looks like. The report tackles many issues which the centre-left has finally woken up to, serious wealth inequality, the exponential growth of poverty pay and a tax system which is less progressive than it seems at first glance.
While the reports proposals are from the same vein as the Labour manifesto of last, it’s rhetoric and ‘big picture’ aspirations are more cautious, conformist and politically orthodox. That’s natural for a nonpartisan think-tank of course and it also reflects the fact that the policies are perfectly amenable to a vision of a social market economy or Nordic-style social democracy. A fairer tax system and a higher minimum wage are key policies, which socialists should support, but they are also basic demands.
This is why it makes perfect sense for the report’s rhetoric to echo the ‘stakeholder capitalism’ of the US’ Nancy Pelosi and the ‘responsible capitalism’ once touted by Ed Miliband.
Yet while it makes perfect sense for nonpartisan think-tanks to be making such demands, the Labour Left — even the soft left, should avoid integrating its ideas into its economic philosophy. The aspirations of Bennites, left-trade unionists, the New Left and so on, include demands for a ‘fundamental and irreversible shift in the balance of power and wealth’ and for working people to enjoy ‘the full fruits of their industry’. Surely that is what we call economic justice?
Activists should interpret the report as an opportunity to demand something more bold and far-reaching, as well as a taste of what a Corbyn government should be doing in its first two or so years. Beyond that, unfortunately less attention has been paid to the bigger picture and to political vision. Hence the need for the politically far-reaching.
After all fairer taxation, and even living wages, will not resolve the fact we live in an economic landscape where some of the wealthiest and most powerful contribute little, whilst taking a lot. Nor will it provide a solution to the fact that the substantial majority of people have little say over how the economy is run and little ownership or control over industry. As far as the left should be concerned these are the issues which need to be resolved before we have economic justice.
The left has put itself in a prime position to show political leadership, now it must exercise it whilst simultaneously handing it down to ordinary people.
Of course there is some cognitive dissonance in believing firstly that the ‘Prosperity and Justice’ is genuinely excellent and that it isn’t quite good enough for the Labour Party. This is because the report’s conclusions do offer some of the very best of bold, shorter-term reform, while the aspirations of the Labour Left’s project should run far deeper. The left’s hopes are for a different kind of society, with concrete industrial democracy, a wholesale transformation of the housing sector and an end to poverty and insecurity.
We know the UK’s economic model is only delivering for one side of a class divide, but an acknowledgement followed by some improvements isn’t enough. What is enough is a truly solidaristic society.