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Miliband has brought together living standards and responsible capitalism

The Labour leader argued convincingly that the cost-of-living crisis is the direct result of the deep structural faults in the economy.

Ed Miliband visits the Five Points Brewing Company in Hackney after delivering his speech on banking reform this morning. Photograph: Getty Images.

There was plenty of politics in Ed Miliband’s speech this morning. The Labour leader has an election to win and banker bashing isn’t going out of fashion any time soon. But the speech was also a serious attempt to bring together the twin tracks of Labour’s economic thinking, which have in the past seemed a little too distant.

By arguing that the cost-of-living crisis is the direct result of the deep structural faults in the economy Miliband made a jump from short-term pressures on family finances to the prospect of long-term decline and insecurity. He brought together the micro-economics of living standards with an argument for a structural, macro-economic reordering.

The case for rebalancing, not just a resumption of growth, is now compelling. Next month a Fabian Society research report weighs up the positive and negative signals emerging from the recovery. On the plus side, growth is of course better than no growth, and the labour market has brought genuine good news. But most of the indicators suggests a deeply-skewed recovery which won’t deliver sustainable, broadly-shared prosperity any time soon: business investment and productivity are flat; household savings are falling and housing is becoming less affordable; real median earnings are not yet growing; and poverty and inequality are on the rise.

In his speech, Miliband talked about business investment, skills and the changing nature of jobs. So Labour is making a serious attempt to respond to these structural faults with long-term structural solutions, not just election-day bungs.

Now the party has to sign-up to market interventions which will move the needle on the big macro-economic indicators, and without costing too much public money. To make a difference on this larger scale it takes a lot of micro-economic interventions (the clue is in the name). So Labour needs to leap-frog the Chancellor's intervention on the minimum wage and promise a slew of similarly radical policies.

The story continues next weekend when Ed Balls makes his first big speech of the year at the Fabian New Year Conference. Balls has sometimes been portrayed as somewhat detached from Miliband’s agenda for economic reform. However, in his interview with the New Statesman earlier this month, the shadow chancellor talked of the economic task being to deliver more balanced growth.

The more Miliband makes "responsible capitalism" sound like it’s really about the economic fundamentals of investment, earnings, productivity and inequality, the more he and the shadow chancellor are likely to be at one. Labour will not be able to sell its economic story with only one Ed. Next week is Balls’s chance to pick up the baton.

Ed Balls will be speaking at the Fabian New Year conference on 25 January www.fabians.org.uk