Constructively Critiquing Corbynomics

Something more significant than the move against Andrew Fisher happened on the right of the Labour Party last week. It was Tuesday morning, in fact, and the occasion was Liam Byrne's speech to the Policy Network.

Of course, MPs, particularly former ministers, give speeches to think tanks all the time and most float under the radar, noted only by the hardest of hardcore politics watchers and professional policy wonks. It's just a shame this one hasn't received wider coverage because in it, as one of its leading figures, Liam reads Blairism and New Labour the last rites. In a nutshell, neoliberalism is dead. The unthinking application of its policies are undermining the health of capitalism, both in terms of destroying the social capital on which market economies depend and proliferating the short-termist culture that goes hand-in-hand with widening global inequality. Hence Labour has to move away from an unquestioning embrace of markets and start thinking another kind of capitalism, or what Liam refers to in his speech as 'entrepreneurial socialism'.

Shifting away from neoliberalism isn't a simple substitution of one policy menu for another, however. Liam notes there are powerful new political and sociological realities we have to face up to. First there are the limits placed on the powers of governments. Arrayed against the nation state are a couple of thousand mammoth globe-trotting companies. Its room for manoeuvre as a territorially-bounded entity in somewhat constrained by their ability to shift resources and capacity from one jurisdiction to another. Secondly, the collective power of wage labour is diminished by historically low trade union membership rates in the private sector. If you like, the disciplinary power workforces can potentially exert on their employers is somewhat weak (indeed, it goes the other way), and that can lead to all kinds of dysfunctional behaviours on the part of owners and senior management. And lastly the composition of the working class has completely fractured, making the building of the sorts of coalitions that can assert collective power against capital far more difficult. Reversing that situation cannot be done by progressive legislation from the top, the capacity for people to organise around their interests has to be inculcated from below - capability assumes an importance greater than an abstract notion of equality. Liam's response - his entrepreneurial socialism - goes like this:

Expecting, encouraging, urging the individual to use their abilities to the full - that's the entrepreneurial bit.

Building a society where each of us are contributing to the common good and a country that makes that easy to flourish. That's the socialism.

Is this guff? Liam's name for it might be a touch soundbitey (remember 'aspirational socialism'?), but his intervention must be judged in terms of diagnosis and prescription. For example, here is the first time I think a mainstream politician has directly addressed the coming wave of automation, a process well known in manufacturing whereby old jobs are replaced by machinery. Here advances in technology are starting to threaten white collar jobs without the corresponding creation of new, 'good' jobs to replace them. Even more worrying, as the economic centre of gravity shifts eastwards that is where these new jobs are most likely to emerge. Dealing with this economic challenge requires an ambitious but realistic policy agenda beyond quantitative easing and nationalisation. For Liam, this means giving the Bank of England the twin objectives of price stability and encouraging full employment. Married to this would be measures aimed at curbing financial short-termism. Particularly key here is tackling the proliferation of pension funds and looking at ways of merging them - here Liam approvingly cites the Australian and Chilean experiences where 'super-funds' are important investors in infrastructure. Also useful is creating incentives encouraging longer-term share ownership, such as enhanced voting rights. Corporate governance and leadership must also be looked at. Here, Liam advocates a change in the law so that companies have a responsibility greater than the bottom line. He introduces the notion of 'fiduciary duty', i.e. that directors of companies are legally obliged to recognise themselves as guarantors of trust between a business and its stakeholders - shareholders, staff, consumers.

Liam's second big policy area is a refashioning of the Office of Budget Responsibility. In a move to strengthen the scrutiny of economic policy by Parliament, he advocates the OBR publish tax receipt projections and what it might recommend to close year-to-year deficits. As a matter of course, it should also comment on the economics of labour markets, employment rates, and impacts of climate change. Thirdly, we need to be pouring more public money into science investment - every pound spent attracts two pounds' worth of private investment. Fourth requires a re-emphasis in education on entrepreneurialism. Everyone should be furnished with the basic know-how how to set up and run a business as a means of unlocking energies and talents that are often unspent. And lastly, social security has to be refashioned so it restores the contributory principle and catches those in insecure work with insecure incomes. The present system is a recipe for insufficient national insurance contributions for a wide range of income support options - perhaps a life-long learning system with provision of grants and loans can help people out of this kind of situation. Liam then concludes the speech with a proposal for a new Clause IV that places the struggle against inequality at its centre.

Before delving deeper, it is worthwhile noting that if the right of the Labour Party are to ever recover, it needs to do more of this sort of thing and fewer clandestine press briefings, fewer silly speeches and articles, and attempt to win intellectual leadership of the labour movement. Whatever you think of Tony Blair and New Labour, this is certainly something they managed for a time. Being seen to undermine the majority choice of our huge, growing membership will only cause them significant problems further down the line.

Overall, from a technical point of view there is little to dispute here. Liam is right that British capitalism is effectively eating itself, and that a strong hand is required to get the thing back on the straight and narrow. Also, rarely for a mainstream Labour MP, Liam shows how all of our economic problems are interconnected - particularly how the behaviour of business, rocketing boardroom pay, the prevalence of low paid work, and under investment cannot be considered separately from the weak hand labour has to bargain with in the workplace, and the wider changes to the class structure that undermine the capacities and solidarities working people depend on to prosecute their interests. Now, while Liam might not see himself as a class warrior engaged in class struggle, he certainly acknowledges its importance via the stress he places on capability building from below to turn this situation around. If it walks like a duck ...

The weakest part of Liam's prescriptions for me is what he has to say about social security. While he is right confidence in it is low (30-odd years of hostile propaganda by all parties haven't helped), I'm not sure how restoring a contributory principle might work - especially as Liam recognises that contributions are sometimes made difficult by the advance of insecure working and the long-term tendency to destroy (presently constituted) white collar jobs. Opportunities for life-long learning and encouraging more entrepreneurialism can only go so far. Both, after all, represent individual routes out of low skill, low pay work comparatively few would go for. And then the problem of their material well-being remains. As Jeremy has argued, more has to be done to assist the self-employed both in terms of growing their business and making sure they have a decent standard of living. I haven't got any easy answers, unfortunately.

As our old friend Loius Althusser was fond of noting, what is not said can often be as important as what is. This was always going to be read through the prism of critiquing Corbynomics, though I don't think all the tribes of Labour are that far away on matters economic than the rhetoric sometimes suggests. Yes, unsurprisingly, Liam is uncomfortable about people's quantitative easing and nationalisation - in the age of the global economy, both might diminish the state's position vis a vis international finance and as a place to invest. I think there are two things worth noting here. On QE, there is danger of both sides turning it into a shibboleth - for naive Corbynomics it's a get out of jail free card, for naive critics it's a totem of Jeremy's lack of seriousness and should forever be ruled out. The truth is it's neither. It's an instrument that is appropriate to certain sets of circumstances. As European economies wobble around deflation, its judicious use might be appropriate right now, for example, to get infrastructure built and put more money into people's pockets. On nationalisation, I can understand the historic reasons why Liam and others from the Progress-y wing of the party are sceptical. But there is nationalisation and there is nationalisation. Jeremy's position is not swapping one set of men in an energy company's office for another set of men sat in Whitehall, but of democratic nationalisation, of introducing democratic principles into how our energy and transport infrastructure are run. This is a fundamentally different fish from what went before in 1945-79 and, crucially, offers opportunities for the kinds of capacity building Liam has in mind.

On the similarities though, Liam, Jeremy, and pretty much everyone else in the party can go along with the proposition that market fundamentalism is a blind alley (and some, like me, would maintain it always has been). All advocate an expanded role for the state, and all believe we need proper plans rather than the government's vapid nonsense. And because there is a shared policy outlook, there is a (largely) shared view on political economy. In his opening passages, Liam attacks the short-termism and the bad behaviour that has weakened the British economy. While British capital does have certain dysfunctional cultural quirks, there is no getting away from the fact that capitalism is a dynamic system, but a fundamentally antagonistic one. On paper, all of Liam's policy measures would, if implemented, lead to a kinder, more secure, more sustainable capitalism. But getting there means struggling against and defeating those interests who would either see their present sectional advantages lost (hello finance, hello labour intensive industry), or see potential dangers in a more confident, better skilled, entrepreneurial, self-activating, independently-minded, and solidaristic workforce.

There is no getting away from class struggle, alas. If this is the sort of programme 'moderate' Labour would like to see, then they have to be prepared to wage it.