On “New Thinking for the British Economy”

Mike Phipps reviews New Thinking for the British Economy, edited by Laurie Macfarlane, published by Open Democracy

This new book is fizzing with ideas that Labour’s next Manifesto writers might want to consider. As the editor says in the introduction, “a consensus on the broad outlines of a new political economic agenda are beginning to emerge” based on “principles of democracy, equality, subsidiarity, resilience and sustainability”.  While this sounds a bit vague, the following chapters flesh out the detail.

Chapter One, on Democratic Ownership, recognises the limitations of previous experiences of public ownership and itemises nine different models – from state to municipal, stakeholder, worker-owned, consumer co-ops, community ownership, not to mention the many hybrids of these types. It details the reasons for public ownership, from securing control of strategic economic sectors, to tackling market failure, decentralising, achieving a fairer distribution, environmental sustainability and strengthening participation.

Democratic ownership, the authors insist, has wider social and economic benefit beyond improving efficiency. It’s  a fundamental prerequisite for real political democracy and empowers people who have traditionally been excluded.

Other chapters offer detailed proposals on, for example, reforming digital technology for the public good – including reforming competition law, regulating the digital giants as utilities and establishing a public corporation to democratise data. The chapter on Work and Free Time proposes shortening the working week, redefining paid work to include not just the precariat but also travelling time – the average worker now spends 27 working days a year commuting – expanding worker democracy and introducing a basic income for all.

The chapter on Transforming Care is important. In England, 1.4 million people over 65, one in seven, now have unmet needs for help with tasks such as getting up, washed and dressed, a 20% increase in two years. As spending on adult social care falls in real terms, the amount of unpaid care – restricting the life opportunities of the carers – grows accordingly. The author proposes not just greater investment, but improving the pay, conditions and status of care workers, as well as regulating other employment to recognise the necessary reality of unpaid care, which would help tackle the gender inequality in this area.

In the event of a radical Labour government, what can be done about capital mobility? Today, as in the 1930s, the inability of democratic politicians to control financial globalisation and its annihilating effects on communities fuel the rise of authoritarian nationalist movements – Putin, Trump and their western European versions – who prefer to blame migrants. Unfortunately, Ann Pettifor’s chapter is vague on detailed answers to this crucial question.

Elsewhere, a ‘people’s banking system’ is discussed. The National Investment Bank was a central feature of Labour’s 2017 Manifesto, but, beyond that, what about transforming the publicly bailed out RBS into a network of local banks for public benefit, as suggested by the New Economics Foundation think-tank? Community and cooperative banking need expanding too, along with a complete separation of retail and investment banking and an overhaul of the regulatory and taxation framework, including a new Financial Transactions Tax.

Housing is a crucial area for policy development. Average house prices are nearly eight times that of incomes, more than double the figure of twenty years ago. Whereas in the mid-1990s low and middle income households could afford a first time deposit after saving for three years, today it takes them twenty years to save for a deposit. Without adequate social housing, the private rental sector is booming and for those in it, the proportion of income spent on housing is the highest in Europe. Laurie Macfarlane agrees with Stuart Hodkinson, who contributed the housing chapter to my own book,  that the roots of this crisis lie in the commitment of successive governments to a property-owning democracy. But how to solve it?

De-financialising private property, public interest-led development and democratic ownership provide some principles. Reforming compulsory purchase laws, a new Land Development Corporation to develop land in the public interest, more community-based non-profit bodies to develop housing or other assets at affordable levels,  and tax reform to incentivise the efficient use of land are some of the means. But if the financial speculation in land values is to be ended, why not also go for a land value tax straightaway, rather than relegating  it to a longer term aspiration?

The book ends with a call for radical constitutional change – not just reforming the House of Lords and the electoral system, but instituting constitutional protection against the government spying on its citizens, measures to tackle the fact that the UK lies 40th in the latest rankings for press freedom and the establishment of new rights for a range of disadvantaged citizens. The authors are right to insist that a new economy is impossible without greater democracy and our current constitution enshrines centuries-old class inequality.

There are a lot of ideas here – the sooner we get started the better!

Mike Phipps’ book For the Many: Preparing Labour for Power is available from OR Books https://www.orbooks.com/catalog/for-the-many-preparing-labour-for-power/