There’s a lot of talk about new ideas coming from the left, a rethink precipitated by the Great Crisis of 2008. This single event put paid to the idea of free market capitalism as somehow perfected and inevitable, the only conceivable economic system that could underpin a prosperous future. As a financialised world economy was rescued from the brink of collapse, discourse turned to other potential threats: growing inequality, the restored hegemony of capital, AI and automation, climate change, each in turn has been identified as a serious fault line in an economic landscape that has become increasingly insecure.
Two recently published Guardian articles offer an overview of the revival in the new left thinking: Will Hutton contends that ‘The zeitgeist has shifted. Now the left is fizzing with ideas for a smarter economy’, while Andy Beckett, in a longer piece, surveys ‘The new left economics: how a network of thinkers is transforming capitalism’. These articles are a good starting point for understanding a newly influential transatlantic phenomenon. Several major themes emerge: democratisation of economic activity; the ‘Preston Model’ (by way of Cleveland) as a template for local wealth capture; promotion of co-operative business structures; widened, longer-term share ownership through (essentially) redistributive models.
A common thread here is that these ideas, in the main, are not at all new. They do represent a turn away from nationalisation and state ownership, but the core principles have been part of left wing thinking for more than a hundred years. So why are they enjoying a revival now? Having been energised by the 2008 Crash, thinkers have focused on a series of emergent threats. A recent Labour policy paper identifies these: ‘The predominance of private property ownership has led to a lack of long-term investment and declining rates of productivity, undermined democracy, left regions of the country economically forgotten, and contributed to increasing levels of inequality and financial insecurity….These issues are all the more pronounced given the increasing levels of automation in our economy.’ The remedy: ‘Alternative forms of ownership can fundamentally address these problems.’ Notably, the alternative models of ownership put forward revolve around co-operatives and municipal ownership.
At this point it starts to feel as though these alternative models amount to a more viable re-worked form of regional policy, particularly in terms of their emphasis on localised democratisation of economic activity. Local wealth capture is at the heart of these ideas, getting as far as possible away from the failures of old models of regional policy – a regime of incentives that resulted in regional satellites catching pneumonia when the more prosperous centre sneezed. Building more resilient local economies where profit is re-invested locally and public procurement supports local businesses is a good idea, especially if it is supported by a local infrastructure of credit unions and regionalised investment banks. The real problem, however, is one of speed and scale. A quotation from Councillor Matthew Brown (described as the ‘visionary’ thinker behind the Preston Model) is indicative: “It’s going to be a devolved economy, a democratic economy, using all these different mechanisms and institutions to localise wealth. It’s probably going to take twenty or thirty years, but it’s already happening…”
‘Twenty or thirty years’ – think about that. And think also about the extraordinary rate at which capitalism evolves and changes: cryptocurrencies, zero hours contracts, Libra, surveillance capitalism etc. have all come to prominence since the 2008 Crash. Capitalism’s rate of change is devastating, and the hegemony of capital is reinforced at every turn. The corrollary of that is that the problems that ‘Alternative Models of Ownership’ seeks to address actually deepen and worsen at the same rate. As a remedy, the new left thinking on this is just too slow – outdated and woefully inadequate. And there is worse: Can anybody with a firm grip on reality envisage local co-operatives or municipal ownership having an impact on automation and robotics through access to the profits they generate? Places like Preston, places seeking to address the problems with which the Preston Model grapples, simply do not have the access to expertise and infrastructure that AI and robotics startups require – by definition they lack the resource base that even basic IT startups depend on – that’s a large part of the reason they have problems and feel ‘left behind.’
To be clear: the old wine in these new bottles is not bad stuff. In particular, recent evidence on inequality suggests that regional imbalances are increasing. Indeed, the ideas are constructive and entirely worthwhile; the difficulty is that they lack the scale and urgency required to make any meaningful impact on the problems they seek to address. These solutions have been tried in many guises before now, and their effect has been marginal at best. The engines that drive inequality move much faster and with greater adaptability
There is, however, an alternative, supplementary, approach that offers a more effective solution. This too is an old wine – one that has been tasted over the years in the arena of policy discussion, but never consumed with serious intent. The idea of establishing a Sovereign Wealth Fund and using it to address issues of inequality is now, gradually, entering the mainstream of new left thinking. The IPPR’s Commission on Economic Justice published a report in 2018 titled Our Common Wealth: A Citizens’ Wealth Fund for the UK. It sets out a strong case for ‘…a mechanism to transform national private and corporate wealth, which are currently very unevenly
distributed, into public wealth, so that everyone can have a stake in the economy.’ The idea is actually a development of James Meade’s (more than fifty years old) concept of a Citizens’ Trust – a mechanism for partially capturing the proceeds of capitalism and redirecting those proceeds to the general economic benefit of all citizens. My contention is that this type of process is the only credible one for addressing the issues of scale and urgency referred to above.
So Near and Yet So Far
Having rediscovered an idea that offers a credible solution, one might reasonably ask why new left thinking approaches it with such conservative timidity. The CEJ’s proposed model would take a decade to build a fund less than £200 billion in value, and then prescribes that its dividends be routed into giving a one-off payment to all 25-year-olds. The scale of the fund is paltry in comparison with the potential, and its proceeds are then channelled into an inter-generational redistributive scheme that will not make much difference to the basic problem of inequality. At this stage I am left with the feeling that new left thinkers have come close to the mechanism they need, but remain a long way from coming to terms with its real potential.
Riding the Tiger
What stands in the way? My own feeling is that there is an inherent reluctance to grasp the opportunity that market capitalism affords In part this stems from a naive and outmoded view of the proper role of the modern state. It also falls foul of an intellectual ghost that continues to haunt the left: the old idea that capitalism’s inherent contradictions will bring about its own ultimate downfall. O’Neill and White refer to this when discussing the Challenge presented by Meade’s thinking: ‘…ideas involving the exploration of new forms of public ownership were controversial within the party – some on the party’s left, such as Aneurin Bevan, saw it as making socialism too dependent on capitalism’. All the evidence suggests that this discomfort is unfounded – capitalism’s flexibility seems to be able to absorb each successive crisis by adapting, learning a little, and then moving inexorably on to the next. Part of its success involves dropping dogma in extreme emergencies (events where, typically, monetarists suddenly become Keynesians and vice versa – all just for a while, and all in the higher cause of survival). The left needs to learn a profound lesson from this (perhaps recalling Lenin’s NEP!), and make up its mind to ride the tiger of capitalism – pulling all available public assets into a Sovereign Wealth Fund, accumulating wealth, banking dividends and capital gains, re-investing aggressively in a more egalitarian future.
I shall return to this theme in future posts.