Beyond simple keynesianism

In the aftermath, of Ed Miliband’s conference speech, I came across two important articles published on the Touchstone and IPPR blog sites. Responsible Capitalism Takes Shape by Duncan Wheldon, and On left populism and Labour’s conference by Nick Pearce. It was Wheldon’s article that caught my eye first but both he and Pearce suggest there is a tension in the Labour Party between those who believe that British Capitalism no longer serves the interests of the majority; that what’s good for business is no longer good for people and the ‘simple keynesians’ who follow the old New Labour policies of using macroeconomic policy and demand management to encourage private sector growth. Pearce argues that Miliband believes that it’s broken and needs rebuilding, he’s on record as saying he thinks the 2015 election will be as transformative as that in 1979 and as he put it in the conference speech in speaking about the fact that capitalism seems no longer to let people afford a decent life,

They used to say a rising tide lifts all boats, now the rising tide just seems to lift the yachts.

ondeck in pompey 2010

Wheldon makes the point that Miliband’s ‘responsible capitalism’ is becoming more than just a sound bite and that his search for ‘predistributive’ policies which took him to the energy price freeze promise is more than just a slogan. In his final paragraphs he says,

Rather than being a ‘return to the 1970s’ the policies outlined in the speech (and alongside the speech in a  60 page economic policy document published by the Labour Party yesterday) struck me as those of someone who understands the need for fundamental reform of the UK’s economic model.

Pearce explores the contradiction between offering a (necessary) radical reform and reassuring the electorate that they won’t lose what they’ve got. It is Pearce, who is quoted by Wheldon who says, there is,

….an intellectual tension on the left between those who argue that the British economy is structurally weak and in need of radical surgery, and those who think that its pre-crash performance was fundamentally sound and that an expansive macro-stance will put it back on track (Gavin Kelly and I have addressed that question and Duncan Weldon’s piece is excellent). Ed Miliband is in the former camp. He has spent the last three years arguing for a ‘responsible capitalism’. Tellingly, he punctuated his speech this week by drawing the attention of his audience to the fact that the ‘most important thing he would say’ was that the link between growth and rising prosperity for working people had been broken, and that only substantial economic reform could restore it.

Both authors are convinced that Ed Miliband is serious about structural reform, so his and Caroline Flint’s threats to break up monopolies may be harbingers of the policy of the next Labour Government, and not just Party management chimeras.

Wheldon in his article and in others makes the point that to achieve its aims, a Labour Government will need a broad range of aligned policies in order to build a high wage, high productivity, competitive economy in which education and skills investment are a part. A goal as Ed Miliband puts it,

…to make Britain better we have got to win a race to the top, not a race to the bottom

Pearce agrees although sees little evidence that Labour is doing the thinking necessary on developing an education and skills policy.

ooOOoo

Some more from these authors,

  1. Responsible capitalism takes shape Duncan Wheldon Touchstone
  2. On left populism and Labour’s conference Nick Pearce IPPR
  3. The political debate on the economy Duncan Wheldon Touchstone
  4. Changing the national business model Duncan Wheldon Touchstone
  5. After the coalition whats left? Gavin Kelly & Nick Pearce IPPR

Comments are closed.