The Big Task For Labour: Find An Economic Theory!

by Ray_North on May 20, 2015

UnknownSo, let me get this right: according to Yvette Cooper, Labour were far too left wing; according to Len McCluskey, Labour were far too right wing; according to Tony Blair it was a lack of aspiration; whilst according to Peter Mandelson, well, it was a lack of Peter Mandelson.

The reality, of course, is that at the last election Labour were neither too right nor too left, unaspirational or otherwise, they were confused and, at times, insincere. And that confusion and insincerity manifested itself most profoundly in their utterances about economics. What Labour did was embrace the Tory economic doctrine of austerity then try to put a leftish compassionate spin on it – they meant well, but the end result was that people either didn’t understand or didn’t believe what they were hearing, or, just thought, well, we’ll vote Conservative because they’ll do it better.

It is true that the party that tells the best story about the economy usually wins the election – and sadly until Labour adopt an economic principle that it genuinely believes in and can genuinely campaign around, then it will continue to flounder.

For some in the Labour movement, this means adopting the narrative of the right-wing – to be pro-business and enterprise, and talk about how they are at one with the aspirations of people to be rich.

They’re wrong. The role of the Labour Party is not to simply pander to what it believes will make it popular, it is more important than that, it must do better – and that means actually attempting to come up with a more imaginative message about the economy that actually accords with the values that most members of the Labour Party believe in, values which have sadly been lost in the desperate attempt to appear relevant to what it perceives to be those who are not instinctively empathetic towards it.

For me, it starts with basic principles and attempting to seize the initiative away from the Conservatives and neb-liberals. They peddle a particular narrative and are happy that to to the average person, economics is all about business and the economy should be judged by fairly crude figures such as employment rates, GDP and growth.

It’s a profoundly simplistic view, a bit like saying a football team is just about the strikers – sure, nothing wrong with having great strikers, but, it will only get you so far, but it won’t win you the league. Business is only a part of economics, and profit is just one particular outcome – it is not the outcome and it shouldn’t be the only aim of economic policy.

What Labour need to do is put together a set of economic principles and values that take it far beyond the simple neoliberal myths and persuades people that there is a different way, a better way.

Now, there are those who write on these pages who have greater knowledge of economics than me – but, I’d start with the factors of production by that I mean the traditional elements of land, labour, capital and enterprise.

With land (and I concede that what I’m about to say, doesn’t tally with the traditional economists view of land), Labour must remind the people that the economy is about the country as a whole – it is not about pockets of the South East and the City. Labour needs to be robust about having a national economy – it is not dangerously left wing to say that having 10-15% unemployment rates in the North East is unacceptable even if the City is doing well – nor is it dangerously right wing to say, I’m proud to be British, because as a nation we have a long and proud history of economic success – the British people are enterprising and hard-working and if they are given the tools they will thrive – Labour should embrace that principle and in particular the fact that it is the ordinary people who built this country.

Turning to people, or labour – the Labour Party has, in recent years, made heavy weather of representing either the traditional working class or appealing to entrepreneurs. Some in the Labour movement are still more comfortable with the concept of class war than they are class harmony, whilst others are happy to neglect the needs of the working class in their desire to attract ‘middle England’ – Labour must grow beyond this and become the party which is best able to forge a partnership between workers and management, middle England and everywhere else; it must come up with ideas for investment and training that will excite those who are deemed business leaders, and inspire working people. Training is vastly important – and although Labour had quite a few good ideas about apprenticeships and vocational training at the last election, what it failed to do, was put them across in the context of an overall economic message. The economy isn’t just about business it is about people. Personally, I am big proponent of works councils and other corporatist structures that will encourage people from different sectors of a company or organisation to work together – is this left wing or right wing? I’m not sure, but it sure as hell works in Germany.

Moving on to capital – Labour must establish that capital isn’t just about banking and that the banks aren’t there just to make massive profits and dish out bonuses, they are there to protect our money, invest it wisely and ensure that capital in various forms flows through an economy. Labour mustn’t flinch from explaining that investment by government is, often the most effective way of spreading capital and investing in all of us – bizarrely the notion of building hospitals and schools became almost something to sneer at during the last election – that is just wrong.

Nor, must Labour be afraid of enterprise, but, it must establish the fact that there is a difference between enterprise that benefits an individual at the expense of a community and enterprise that benefits all of us – Labour must embrace the green agenda in sustainable enterprise and it must foster a sense of community and society. When it comes to enterprise as well – Labour mustn’t shy away from the fact that the government can sometimes act like a entrepreneur, and that just like a businessman may seek to borrow and invest to make his business grow, a government can do the same to improve the lot of the nation as a whole – in the age of austerity, borrowing has become a dirty word – why? Nothing wrong with borrowing to invest, especially if the conditions are right, which they are now.

These aren’t left-wing ideas, this isn’t Marxist-Leninist theory, I’m not proposing that Labour suddenly adopts policies about mass-renationalisation and state control of everything – I’m suggesting that Labour needs to adopt an economic message that speaks to everyone, and has running through it fairness and equality of opportunity, because only then can it start to expose the unimaginative, greed based fallacy that is the economic policy of the right.

{ 5 comments… read them below or add one }

Nick May 21, 2015 at 5:34 am

A very good description of the Green Party vision.


Ceri May 21, 2015 at 8:57 am

In fact, the bits about labour and capital are a very good description of the economic policy that has served the CDU in Germany – and a host of world-beating companies – well for decades.


Charlie East-West May 21, 2015 at 9:02 am

Great article, Ray.

What you have described is the SNP economic policy.
This is worked in Scotland because the SNP have ruthlessly cultivated a series of messages that reasonate with the electorate. They make it accessible and easy to understand.

Until Labour do the same, they will continue to flounder.


Eddie Kaye May 21, 2015 at 12:25 pm

Back to the ‘progressive bloc’ that was never really mooted. Both you and Nick pick it up Charlie. I remember during the campaign that more than one person hinted that if Labour had got hold of the SNP or Green manifestos on the way to the printers and re-badged them they would have stood a chance.


micky middle east May 21, 2015 at 11:19 am

Nice summary and as the couple of other comments have reminded us these policies are workable and on the agenda of other left-wing grounded parties. Labour has lost its way and is in danger of becoming more irrelevant with each major election cycle.


Leave a Comment

Previous post:

Next post: