Will a Starmer government hold firm to its policies? Raphael Kaplinsky responds to Bryn Griffiths’ article on Labour Hub last week

Many thanks to Bryn for a challenging response to my talk at the Lewes Labour Party meeting on 8^th July. I very much enjoyed the discussion and learned a great deal from the various contributions, not least Bryn’s verbal intervention and now his thought-provoking blog.

At the outset, I would like to make it clear that I have no window into the discussions at the centre of the Party. Moreover, there are so many unknowns beyond my ignorance of internal Party discussions that it would be foolhardy for me to nail my flag to a particular set of outcomes. The reality is that to a greater or lesser extent we are all fumbling our way forward in the dark, and let’s hope we fumble forwards rather than backwards!

Before I respond to specific issues raised by Bryn I would like to briefly fill out some of the discussion in my book regarding praxis and agency – the time allotted to me did not allow me to address them in my talk.

Bryn succinctly summarises the major challenges which I identify which are designed to provide a sustainable directionality to the transition in paradigms – confronting and overcoming the power of the plutocracy (we used to call this a ‘class’!) to determine the agenda and to command the allocation of resources; reining in financial capital and directing finance towards greening; using the Green New Deal as the primary driver of paradigm transition; devolving power to the periphery while simultaneously pursuing power at the global level; and promoting global development in the interests of a sustainable future, with particular (but not exclusive) emphasis on greening and greater global and intranational equity.

Phew! The challenge is daunting. If we are to be successful, there will inevitably be trade-offs: we cannot achieve any or indeed all of our objectives maximally. It will also not be a rapid transition, although the climate challenge is urgent; and it will be contextual: there is no one-size-fits all solution.

In my book, I discuss the agency which is relevant to address these challenges. I distinguish three sets of actors and lay out a policy agenda for each of them. The first is of course the state. Government has a critical role to play, particularly in establishing a bold and comprehensive agenda. It will in some limited respects involve state ownership, especially over infrastructure; but more important is the provision of incentives to guide actions by a range of non-state actors, including through regulation, financial carrots (subsidies) and sticks (tax and penalties). I go into this in some detail in the book.

Second, we cannot ignore the primary role which the private sector plays in capitalism. As Mariana Mazzucato makes clear, almost all of the primary technological revolutions which drive the new ICT paradigm were initiated by and funded by the state. But it has been the private sector that has driven these into productive – and frequently also unproductive – technologies. So the state and the private sector have to work synergistically – it is not only the state or only the private sector.

The challenge is to create an environment in which the private sector pursues its quest for profitability in a way which builds rather than undermines a sustainable world. For example, breaking up the increasing concentration of ownership across most sectors of the global economy; promoting innovations in renewables and repairable products; addressing neglected tropical diseases as well as drugs for cancer and dementia; ensuring safe and stable workplaces; and most of all, pursuing a green investment agenda.

And then finally there is the role to be played by what I refer to as ‘civil society’. Auto-critically, my book does not adequately address the specific challenges raised for the labour movement in the transition to a more sustainable world, an issue raised at the meeting by Hilary Wainwright and others.

All of this brings me to Bryn’s major challenge to my talk, which is: in the light of recent policy statements, can we trust a Starmer-led Labour government to address any of these critical systemic challenges in a meaningful way?

I of course don’t know the answer to that and, if I may observe, neither does Bryn. But here are some points which leads me to a half-full bottle:

• Whether we like it or not, global financial markets play a critical role in national policy. Finance capital is already hovering over a potential Labour government now and will be ready and eager to swoop at any ‘missteps’ after an election. Think Liz Truss. When the markets attacked her ‘growth agenda’, interest rates rose rapidly and dramatically, with devastating social and economic impacts. The subsequent crisis ruled out any policy agenda, progressive or regressive.

Thus a new Labour government has in the first instance to demonstrate ‘competence’, but to do so in a way which provides the leeway for radical changes once the storm has subsided. I believe, but don’t know, that this is what is driving the staging of much of the Starmer agenda, for example, building to a massive greening agenda over the first two to three years of government rather than immediate spending of large sums. Without a measure of acceptance from the financial markets, a progressive policy agenda will sink in a moment, the only beneficiaries being right-wing populists. Think about the consequences of Jeremy Corbyn’s undeliverable commitment to pensions at the very last moment of the last election.

• When Gordon Brown took over the Treasury in 1997, the first few years were a period of austerity. But the near-term fiscal consolidation provided the legitimacy and resources for a subsequent successful assault on child poverty, for major investments in the NHS and an expanded budget to support global development.

• The UK economy is in dire straits, much worse than in 1997 or in 2010. The challenges to an incoming government are both frightening and many – Brexit’s impact on trade, labour supply and inflation; the collapse of social and economic infrastructure (how apt Galbraith’s description of the US in 1929 as a world of private affluence and public squalor); a catastrophically low rate of investment; short-termism; financialisation; and more. Not only have living standards fallen sharply and inequality risen, but the underlying economic motor is shot. The depth of our underlying structural problem cannot be overemphasised. We are in severe trouble.

And this inevitably places political constraints on government spending. We know from a technical point of view that the concern with ‘government budgets’ is highly contestable. Stephanie Kelton’s insightful book The Deficit Myth explains convincingly why and how governments can indeed in some circumstances print their own money without inflationary consequences. But arguably this independent road to monetary policy is only open to very large countries (the US, China, India and the EU). If a new Labour government tried to pursue this route from the outset we would be in Truss territory. It’s sad, but true, I am afraid.

So, what awaits us with a Starmer government? Will we witness a period of total capitulation, not just on greening but across a much wider spectrum of issues? This is clearly what worries Bryn and others and in my darker moments, me too. Or is it a matter of Starmer ‘looking right and turning left’? And let’s not personalise this – it’s not just a ‘Keir issue’.

I don’t know which of these scenarios is correct. Looking through a half-full glass I observe approvingly what Biden has achieved – the most progressive policy agenda in the US since the 1930s, and the most radical policy agenda since Reagan in the early 1980s. I of course hope that this is what a Starmer Government is targeting, and I hope that Ed Miliband’s continuing presence is a sign of this.

I continue to hope for a positive outcome and in my small way to add to the pressures demanding a progressive agenda. What I do know is that if we get it wrong the costs of missteps are enormous.

Faced with this alternative I am reluctantly willing to put my trust in Keir, Ed and others. They have clearly put an enormous set of resources into determining a strategy to ensure a majority Labour Parliament. Our responsibility is to hold their feet to the fire.

A luta continua…

Raphael Kaplinsky is the author of many books, the latest being Sustainable Futures: An Agenda for Action (Polity 2021)

Image: c/o Mike Phipps