Why we should bring back corporatism

Corporatism is out of fashion; it has been a dirty word since the 1970s. Yet it helped to create the postwar settlement that saw an unprecedented growth in working-class wealth and opportunity. It accepted that tensions between labour and capital existed and mattered. But it provided a framework of institutions that allowed the left to manage those tensions. The structures were called "tripartite": they brought together at national level representatives of government, big business and the unions, with pay awards central to the agenda.

Corporatism was characterised by "beer and sandwiches at No 10", the interventions of Acas in industrial disputes, and big and little Neddies (national economic development bodies). Crucially for the left, corporatism provided the mechanisms to ensure that the values of equality, liberty and fraternity were at least a match for the values and power of the market. They brought business leaders to a negotiating table where the interests of people could be put before profit.

Old corporatism was junked as part of the bureaucratism that was "holding Britain back"; business was set free of social constraints. In the wake of the neoliberal tide, we Labour modernisers accepted that corporatism was dead. But did we throw out the baby with the bathwater? New Labour's breakthrough was to recognise the importance of economic efficiency. Yet business does not always know best. We rejected corporatism when we should have worked out how to make it relevant to the modern world.

Capitalism's current problems, allied to a rise in union confidence, give us a second chance. There is no going back to the 1970s. A new corporatism must differ from the old in both substance and style. Instead of national pay bargaining, it would focus on raising pay at the bottom and controlling awards at the top. It would deal with career development that gets people out of dead-end jobs. It would try to rebalance life for those who are cash-rich but time-poor, as well as for those who suffer the opposite problem. It would focus on the environment and thrash out new corporate governance guidelines to hold business leaders to account. It could even seek consensus for seemingly intractable policy problems such as transport, housing and pensions.

The seeds of a new corporatism lie in new Labour's love of commissions and quangos, but it needs to operate differently. It should be joined up, democratic and accountable. Its emphasis should be bottom-up rather than top-down, seeking to empower rather than direct, its structures populated with faces that match modern Britain. It would involve small enterprises and the "third sector" of voluntary and mutual organisations, not just big business. A new corporatism would be regionalised and decentralised. Its priorities could be determined by new deliberative democracy techniques such as citizens' juries or mass qualitative polling.

When Labour does eventually lose, it will fall far and fast unless the institutions of social democracy that corporatism nourishes (the national and local state, the unions and the party itself) are there as a safety net. (The Conservatives, who neglected their old networks and institutions when they were in power, provide a salutary lesson.) A new corporatism offers Labour and the unions a working relationship, beyond the present destructive rhetoric. Above all, it offers a way to make markets the servants of the people, to place the needs of business within those of the wider society and to give capitalism the strong regulation that could save it from itself.

The prize is a new, post-Thatcherite settlement on terms that favour the left and working people. And the threat, if collectivism is allowed to fail once more, is the final victory of the market and the full privatisation of the public sphere.

Neal Lawson is managing editor of Renewal, the Labour quarterly journal