John Gray rightly argued in these pages last week that there is no going back to the world as it was. Nor would many desire it. The Brexit vote was a decisive rejection of the status quo, and politicians’ response has so far been inadequate. Whatever happens after the resolution of the Brexit process, we need a radical transformation of Britain’s economic settlement.
The origins of our political crisis lie in the liberal market settlement of the last four decades. Globalisation increased trade, brought down prices and raised millions out of poverty, but globalisation also eroded national sovereignty and democracy. The financial sector, followed by big tech, became a law unto themselves. Britain went further than others with this liberalisation. Politics became technocratic and our democracy failed to represent those experiencing the negative impacts of globalisation. The consequence has been a crisis of Britain’s constitutional order.
Britain is divided by geography and class. In the globally connected, deeply unequal metropolitan cities the asset-rich elite and the professional classes have taken the lion’s share of wealth, jobs, and political and economic power. In rural areas, the urban hinterlands and ex-industrial and coastal towns a different society has taken shape – more equal but poorer.
Here, the loss of industrial work has led to the destruction of the labour interest and its collective political power and identity. The growth in low-paid, low-skill and temporary jobs has created a precarious society. The human cost has been higher levels of chronic illness, loneliness and social isolation. In the EU referendum the majority voted against the political establishment, accusing it of ignoring their concerns and failing to safeguard national sovereignty.
Centre-left politics has not grasped the nature of this crisis. We have neglected or shown contempt for the things that matter to people. We have failed to rethink our political economy and the gains of right-wing populism have been the consequence. The safeguarding of our democracy and prosperity depends upon our ability to unite our national political community. It will require fundamental reform of our economy that focuses on the everyday life of work, family and the places people live.
Past governments have too readily accepted a model reliant on the globally mobile, financially extractive parts of the economy. We focus too much on high-growth industries and too little on where most people work – the everyday economy, which is made up of the private, public and social sectors in every region whose services and goods sustain our daily lives.
It is the social foundation of our country, sustained by the hard work of people who are frequently under-appreciated. Without them our schools, nurseries, hospitals, care homes, warehouses, food processing centres, supermarkets, hotels, cafés and restaurants would shut down. Our public service infrastructure would collapse.
Outside London and the south-east no region has yet fully recovered from the Great Recession. And yet policy concentrates on the cities as engines of growth and on the property development, technology and trading sectors. It neglects the middle- and low-paid and the civic infrastructure required to develop research and innovation across the whole economy. And it tends to exclude rural areas and towns from the wealth-creating activity it is promoting.
The correct response to the 2008 crisis and to the 2016 referendum would have been to prioritise the social and economic problems impacting these areas. Communities are at the core of reversing economic decline but we patronise them with a command-and-control approach. Effective devolution demands a radical change in how central government works.
Deindustrialised and cut-off places suffer economic disadvantage but retain strong social bonds. Everyday economics builds upon these relationships to create new forms of economic activity. It involves breaking up unaccountable concentrations of power, and a transfer of rights and powers to ordinary people, workers and their communities. It means guaranteeing universal basic infrastructure across the country and building up locally owned assets.
Businesses have become untethered from responsibilities beyond those owed to shareholders. We need reform of corporate governance to create grounded firms, responsive to their workforce and to the communities in which they operate. Central and local government can use their contracting powers to implement a form of social licensing. And government must break up monopolies and cartels, such as those in energy, house building and tech, which undermine our democracy and economy.
In the decades of the Industrial Revolution, Labour built its political power around the everyday economy of work, clean water, utilities, housing, education, and social services. It grew its roots in local places protecting working people, their neighbourhoods and their family life. We once again need a political economy of everyday life.
Rachel Reeves is a Labour MP for Leeds West and author of “Women of Westminster: The MPs Who Changed Politics” (IB Tauris)