In his speech in Manchester today (23 February) Keir Starmer continued his call for a new politics that gets things done. “Things that could be sped up, joined up, given direction, made to work better. This is at the core of my politics.” Labour will be a mission-driven government. “Not command and control, Whitehall knows best. But an approach that understands what national renewal means.” For the first time since 1997 Labour has the opportunity to shape the future of the country, and yet never has it appeared so unprepared for power. Despite the ambition and right-sounding phrases, Starmer’s speech couldn’t disguise the party’s lack of political thinking and policy development.
In the past Labour could call on the revisionism of Anthony Crosland’s The Future of Socialism, the modernity of Harold Wilson’s “white heat” of technological revolution, or Tony Benn’s Alternative Economic Strategy. But that was then. Under Ed Miliband, One Nation Labour began with good prospects but was quietly put to rest. Jeremy’s Corbyn leadership left no enduring intellectual legacy. The last serious effort to rethink the party’s purpose was New Labour’s adoption of the Third Way in the 1990s. Under Keir Starmer it remains Labour’s default position.
After a decade without political renewal, the party’s leadership lacks a credible diagnosis of Britain’s crisis. It is politically still reliant on New Labour, the last incarnation of Labour’s historical British nationalism, and on a worldview formed in a post-Cold War period of globalisation. Holding on to this legacy threatens electoral failure, and yet the party is reluctant to let go. In this hiatus Labour projects a message of technocratic pragmatism. Mission-led government is the illusion of doing government without politics. “Getting things done” is a laudable aim but it requires deeper political foundations than Labour currently possesses and the party has to start digging them.
Time to let go
The economic orthodoxies that have prevailed during the last four decades brought new opportunities and new affluence. But the foundations of this economic growth were shallow. Advancing a globalised liberal economy when Britain was no longer a world power had inevitable consequences. Without protectionism, British domestic industry struggled to survive. Myth surrounds the period of liberal market hegemony. It did not lead to entrepreneurial wealth creation. There was no Thatcherite miracle, no national economic revival, no sustained bursts of innovation, and no rapid increase in productivity.
Instead, GDP growth consistently fell below post-war levels. Permitted by successive governments, low-productivity firms chose immigration and cheap labour over training and technological innovation. The burdens of flexibility and risk shifted from capital onto workers, creating widespread economic insecurity. Casualised work re-emerged and welfare benefits subsidised low wages as businesses became a parasitic force on the public purse. People resorted to borrowing, increasing levels of personal debt.
The disproportionate growth of a rentier economy undermined national productivity. The political economist Brett Christophers has defined “rentier capitalism” as a form of non-productive wealth extraction, as “income derived from the ownership, possession or control of scarce assets under conditions of limited or no competition”. In the aftermath of the 1986 “Big Bang” of City deregulation these rent-producing assets multiplied to include housing, land, public sector contracts, privatised utilities, digital platforms, intellectual property rights and a proliferation of financial assets.
By 2008 the modest growth in GDP had become detached from any sustained increase in living standards. The promise that economic growth would translate into rising prosperity for working people and their families proved false. Private incomes were sustained at the expense of public goods, while financial speculation and rent seeking replaced value creation. The country was living off the sale of public assets built up over generations.
More than other OECD countries, British governments relinquished democratic control of national economic development and turned strategic assets over to unaccountable corporate interests. The combination of globalisation and government policy turned the UK into a dual economy, divided between the high productivity, highly unequal, metropolitan cities and university towns, and the urban hinterlands, small cities, towns, coastal and rural areas experiencing forms of economic “undevelopment”.
As Scotland lost its heavy industry and became more integrated into the wider UK model of economic growth, its demands for independence grew. The imperial and industrial class structures that once held the Union and peoples together are gone. Without them, the asymmetries of power, the appeal of national identity and the stresses of national differences both ancient and modern have all been amplified. In the 2015 general election Labour was wiped out in Scotland. The United Kingdom was coming apart.
Following the 2008 financial crash George Osborne and David Cameron responded by rewarding the bankers and punishing the poorest with a decade of austerity. Real wages flatlined. Local authorities were impoverished, regional inequalities widened and public services withered. The onset of the Covid-19 pandemic revealed a dysfunctional, risk-averse and hollowed-out British state. Today it is commonplace to say that nothing works anymore.
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The end of liberal globalisation
Globalisation has been eclipsed by the return of geopolitics. Across the world, free trade and market liberalisation are being challenged by national governments turning to neo-mercantilist policies of state-making and national economic development. At the World Economic Forum in Davos this year, the US trade representative Katherine Tai acknowledged the end of the liberal economic order. The US is committed to a “worker-centred” trade policy that recognises the importance of trade unions to America’s economic vitality. Trade policy must benefit not just consumers but “workers, family members and community members”.
The geopoliticalisation of trade and investment policy is here to stay. “Mercantilism is alive and well,” according to the economist Dani Rodrik. “Its continuing conflict with liberalism is likely to be a major force shaping the future of the global economy.” Economic nationalism has returned as nation states intervene to offset market failure, and take the first steps in responding to structural economic dysfunction and a breakdown in their domestic social contracts. The world is in the midst of a transition away from neoliberalism. What will replace it is highly uncertain. Yet policy shifts on both the right and left suggest the beginning of a new bipartisan consensus which Rodrik calls “productivism”. The emphasis is on production and investment over finance, and revitalising local communities over globalisation.
Government and civil society play a significant role in achieving this goal. In 2022 Labour began tentatively to follow the productivist turn of the Biden administration. Starmer spoke about the national economy, a significant change from New Labour rhetoric in which the economy exists beyond democratic control, place and territorial boundary. He described Labour as “pro-business, pro-worker”, and acknowledged the importance of the “everyday economy” in sustaining the daily life of every citizen. Lisa Nandy, the shadow levelling up secretary, called for a great rebalancing of power between capital and labour, north and south, city and town that gives everyone the opportunity to contribute to rebuilding the nation and sharing in the rewards.
However, at its annual conference last year, Labour retreated behind an anodyne and empty slogan: “A fairer, greener future.” Its commitment to “make Brexit work” lacks the necessary vision of a new economic model. The everyday economy is frequently evoked but there is little explanation of what it means. What is the relationship between Labour’s industrial strategy and its Green Prosperity Plan and what part will they play in levelling up and the proposed Take Back Control Bill? Policy ideas have come and gone. Nothing has been joined up into a master narrative of Labour’s political purpose.
[See also: How Labour hopes to restore faith in the police]
To defeat the Conservatives in 2024, Labour must win in England and be the party of the national economy with a plan for national reconstruction. Its strategic priorities should be work and wages, families, and local places, determined by the interests of the less affluent English working class that lent considerable support to the Conservatives in 2019.
Fundamental to such a plan is the politics of covenant which puts the practice of reciprocity at the centre of social and political relationships. One of the most pressing tasks is to reconnect the political class with the country and restore public trust in democracy and government.
The liberal solution is to establish a “social contract”, an agreement between rulers and ruled that defines their respective rights and duties and provides the consent of the governed. Following John Locke’s Second Treatise of Government (1689), social contract has become the basis of a liberal political order – the consent of every individual to form a community “with a power to act as one body, which is only by the will and determination of the majority”.
But this kind of social contract excludes too much of human social life to provide a method for Labour’s political renewal. Its original purpose was to secure individual property rights, and it ignores the social relationships and asymmetries of power between groups, identities and individuals. The meanings of custom and culture elude it.
Social contract lacks what the socialist thinker RH Tawney called the “common foundation”. “The liberty of the weak,” he wrote in Equality (1931), “depends upon the restraint of the strong, that of the poor on the restraint of the rich.” Everyone should have the liberty “to do unto others as he would that they should do unto him”. This is the common foundation of reciprocity, upon which rests liberty, equality and morality, and which can be best expressed in the idea of covenant.
Covenant belongs to Labour’s lost religion of socialism. It involves political relationships that have to be brokered by negotiation and compromise. Over the last two decades Labour has lost both its moral lodestar and the art of politics. Its language has become about delivering, about doing things for people, and speaking on behalf of the less fortunate. It has promised redistribution rather than contribution and lent itself to paternalism and the creation of dependency and clientelism.
Covenant asks for a contribution from individuals over and above their self-interest. In its secular form it remains a powerful source of both solidarity and self-esteem that, in Tawney’s words, calls on the people’s “vast reservoir of latent energies”.
The national economy is the foundation for renewing a covenant between citizens and government. The object of economic nationalism is to change the economic model from assets and rent seeking to wages, productivity and the security of households, to increase household living standards. National reconstruction has to be bottom up and state led, organised around an economics of place which will deepen and extend devolution and democracy, notably in England.
Of all the nations of the Union, England has the most centralised form of government and has gone furthest in removing powers from local democratic influence. Creating local power and capacity building is the first step to changing governance and introducing more long term forms of funding and fiscal devolution. In Whitehall, departmental silos have to be broken down by the establishment of a coherent machinery of government for England.
Institutions are the basis of a covenant because they embody the practices, rules and customs that structure social and economic life. This could include developing the UK Infrastructure Bank and British Business Bank into regional banks; a devolved system of skills training, apprenticeships and vocational colleges, bound by a social partnership between unions, employers’ associations, local authorities and ministries; the reform of corporate governance so that companies with more than 50 employees would have at least two elected employees on the board, and similar representation on remuneration committees; and to restore reciprocity in the tax system, we need to prioritise asset wealth for taxation through a land value tax or reform of the council tax system (unrevised since 1991), and a capital gains tax paid at income tax rates.
The purpose of the national economy is to secure the supply of basic goods and services that sustain everyday life: the food we eat, the homes we live in, the energy we use and the care we receive. This is the everyday economy, which employs at least 40 per cent of the workforce in England and Wales. Everyone, wherever they live, participates in it, binding society around the shared necessities of life. Policy needs to focus on improving the pay and conditions of work and on “liveability”, ensuring all have access to universal basic services regulated by a system of national standards.
The crucial assets of a national economy are strong local economies and cultures: the whole fabric of local histories, connections and values that make up a shared way of life and give meaning and purpose to individuals. Local communities are primarily about relationships and attachments to people, to place and through time. The social entrepreneur Jessica Prendegrast defines community as the way we feel rooted in the world, providing our sense of security and belonging. The best way to encourage, embed and broaden attachments is to invest in good jobs for community wealth building, neighbourhood safety and social infrastructure – the shops, community centres, parks, nurseries, schools and hospitals that create opportunities for doing things together. It is this social fabric that binds a nation of diverse peoples together in a shared economic fate.
[See also: How Labour hopes to restore faith in the police]
The next ten years
Labour built its political support on the peripheries of imperial and class power in the Celtic countries, the North and the industrial regions of England. Here the ways of life were organised around work and community. Political values came from the moral economy of Nonconformism. The disciplines of Methodism offered the values of fraternity, learning and leadership skills. Mutual self-improvement societies and the huge popular movements of voluntary collectivism gave Labour its political organisation. All is now gone.
The imperial and financial heartland of Britain was located in London and the South and was dominated by the Conservative Party. It now contains Labour’s new heartlands. Its last three leaders all live within a few miles of one another in north London. How can Labour broaden its narrow coalition of graduates and minority ethnic groups and become the national party of England, a country it struggles to name? And can secular Labour break with its thin progressivist politics and re-constitute a lodestar out of its moral and religious traditions?
For all the fine words, mission-based government is oblivious to these kinds of questions. Seeking a technocratic solution to existential predicaments will not help Labour to navigate this long interregnum of upheaval, threat and political inertia. In government or out, until Labour renews the fundamentals of its own traditions and defines its political purpose it will muddle through our broken social order, surrounded by metaphorical rubble, unable to imagine the future and prey to events.