The Bank of England is predicting continued economic stagnation in Britain for years to come writes Jonathan White, editor of a recent book Building an Economy for the People: an alternative economic and political strategy for 21st century Britain. This book is a must read for all interested in an alternative to Osborne's slash and burn programme.
The IMF is warning George Osborne that endless austerity will be self-defeating. The TUC has adopted calls for an alternative economic strategy and endorsed the broader People’s Charter, while, back in October, tens of thousands marched for a Future that Works. In Europe, the economic failure and social costs of austerity policies produced a general strike. In such a context, discussions of the need for an alternative economic strategy are beginning to reach into the political mainstream.
Compass’s Plan B document was one of the first to articulate a clear vision for such a strategy in a way that resonated more widely and, for this, the left owes Compass a debt. And, recently, a group of academics and experts have produced a new contribution to this growing discussion: Building an Economy for the Future, published by Manifesto Press.
Many of the ideas in this book will be familiar to readers of Compass’s Plan B: the creation of a state owned investment bank; the provision of finance to fund a house building and retrofitting programme; investment in infrastructure; and the funding of new green industries to rebuild an industrial base and to enable us to meet our internationally agreed sustainability targets.
Yet, Building an Economy for the People can also be seen as a sympathetic critique of Plan B. The book begins with a harsher analysis of the effects of the financialisation of the British economy. The City of London, it argues, has not only distorted the economy and eroded the UK’s productive industrial base, it has also reshaped corporate behaviour around the imperatives of short-term shareholder value, and driven both the privatisation of the public sector and the financialisation of everyday life. Furthermore, it has played a key role in hollowing out our democratic institutions and corrupting our political culture.
Consequently, any Labour government - or even any future progressive coalition of any kind - would have to begin a serious, sustained strategic challenge to the economic and political power of the City if it hoped to deliver even a modest egalitarian agenda or to return our withered economy to sustainable growth.
Building an Economy for the People argues that mounting such a challenge to the power of the City requires the left to engage seriously once again with the issue of democratic social ownership. For example, as well as a supporting the call for a fully nationalised British Investment Bank, using our already state-funded banking sector, the book argues for the creation of a new mutual sector in retail banking. It also argues that counteracting the short-termist corporate culture in new industries requires an active state, taking public stakes in new strategically important industries, such as green industries, to ensure that they are oriented to the long-term democratic goals of a progressive government.
Similarly, any progressive government aiming at redistribution, to create growth and narrow the obscene inequalities in British society, must re-engage with the need to reassume public and democratic control of a large number of services. It is not enough simply to argue for raising living standards and to adopt a position of neutrality on how housing is provided, or on how health, welfare or education services are delivered. Reducing poverty also requires us to insulate people from dependence on volatile asset markets and to begin to reverse the financialisation of everyday life.
In short, social ownership matters because it reduces the power of the financial services sector over political, economic and social life and correspondingly increases social and political control of the market. It multiplies the levers at the disposal of government and puts politics in command. But, the book insists, this is not just a statist argument. Public and social ownership can take many forms. They have to assume the one most appropriate to the particular area of the economy, service or sphere of social life in question.
Social ownership must also form part of a deeper process of democratisation of the economy and society. Public stakes in companies, for example, must be used to promote union membership and collective bargaining, while new model public services must also mobilise their workforces and bodies of service users in their planning, monitoring and delivery. Democratisation is important as a good in itself, but also as a political necessity. Involving masses of people in economic and social life offers the best defence against any future repeat of the counteroffensive launched by capital against public ownership from 1979 onwards.
This argument leads to the book’s final point. Given the level of extra-parliamentary resistance such a programme is likely to face from the corporate media and financial markets, any future Labour or progressive coalition government must be able to count on its ability to mobilise an active movement and broad alliances in support of its policies. This means leaving behind once and for all the facile consumer politics which underpinned New Labour, and learning once again how to mobilise the extra-parliamentary power of masses of people. It’s a big project. Compass has already made a key contribution to these debates. We hope that Building an Economy for the People will do so too.
Jonathan White is the editor and co-author of Building an Economy for the People: an alternative economic and political strategy for 21st century Britain. He tweets at @JonathanWhite73
Building an Economy for the People: an alternative economic and political strategy for 21st century Britain, edited by Jonathan White, with contributions from Mark Baimbridge, Brian Burkitt, Mary Davis, John Foster, Marjorie Mayo, Jonathan Michie, Seumas Milne, Andrew Murray, Roger Seifert, Prem Sikka, Jonathan White and Philip Whyman. Published by Manifesto Press, £6.95.