The New Statesman’s rolling politics blog

RSS

Labour's economic challenge

Ed Miliband needs to make sure his colleagues understand the need for radical change.

The deputy leader of the Labour Party, Harriet Harman, appeared on the BBC's Andrew Marr Show this morning. Harman was asked by Marr about the new kind of economy envisaged by Ed Miliband in his speech to Labour conference last month. Her rather unconvincing answers tended to confirm the analysis of the chief economist of the IPPR Tony Dolphin, who argued here recently that it's much harder to articulate a new economic paradigm than it is simply to assert that things need to change.

Dolphin wrote that "Distinguishing between 'predators' and 'producers' was an unnecessary hostage to fortune". Questions about good and bad businesses drown out, Dolphin went on, the "arguments of thinkers such as Will Hutton, Anatole Kaletsky and William Baumol over different models of capitalism". Marr duly asked whether Top Shop boss Sir Philip Green was a predator or a producer. Harman replied somewhat uneasily that "it's not about individuals", rather confirming Dolphin's fears.

Miliband and Labour's main problem, according to Dolphin, is that "there is no new well-developed economic model - comparable to monetarism in the 1970s - sitting on the shelf waiting for him to pick it up and champion it. He therefore faces a tough decision. Does he want to tinker at the edges with the existing model - a bit more banking regulation here, an employee representative on a company board there? ... Or is he prepared to make the case for more radical change and to champion those independent voices in economics that are not heard enough? "

When Marr invited her to elaborate on Labour's vision of a new economy, Harman did make it sound as if all Labour has in mind is to tighten up the regulatory framework governing financial services. But I suspect Miliband doesn't want to take to the easier of the two options Dolphin described and does want to "make the case for radical change". If that's true, then he needs to make sure his colleagues, Harriet Harman included, understand just what he has in mind.