Since the financial crisis nearly a decade ago, the two main political parties have struggled to set out a new model that can overcome the deep-seated problems of the British economy. Among those are a concentration of wealth and ownership, flat-lining productivity, real wage stagnation, as well as a growing imbalance between regions and sectors. The promise that a gushing spring of wealth in London would progressively trickle down every provincial gulley has not come to pass.
The Conservative government seems unable to abandon austerity or reform the cartel capitalism that brought us the collapse of Carillion. Consumed by their divisions over Brexit and blinded by neoliberal ideology, the Tories are wedded to an economy of low growth and further cuts to public services.
Labour, by contrast, has caught the popular mood and offered a range of attractive policies – from nationalising the railways via slashing tuition fees to boosting expenditure on the NHS. Jeremy Corbyn’s and John McDonnell’s state interventionism chimes with many in the country who reject four decades of market fundamentalism.
But what both parties have in common is a focus on the aggregate economy and abstract statistics such as GDP, national debt or total spending that are disconnected from the everyday lives of people.
It is here that a pamphlet published today breaks new ground. Written by the Labour MP Rachel Reeves, who chairs the Business, Energy and Industrial Strategy Select Committee, The Everyday Economy shifts the emphasis to those economic sectors made up of services, production and social goods that sustain our daily lives – retail, the food industry, hospitality, as well as manual jobs such construction and security.
This part of the economy is characterised by low wages, low productivity and low skills, which prevent strong growth and human flourishing. Tackling these structural failures is key to a programme of national renewal that can provide shared prosperity for the whole country.
The key insight of Reeves’ pamphlet is that the foundations of wealth and value creation are being undermined in ways harm all of us except perhaps the top 1 per cent. Cleaners, carers, rubbish collectors, nurses, shop workers and those picking crops are among the forgotten people of our economy. Their hard work is neither properly rewarded nor recognised and their meagre pay means that they struggle to make ends meet.
A steady flow of immigrant labour has reinforced the exploitation of workers while the top managers and their shareholders extract rents – excessive profits that far exceed value creation. This rentier capitalism destroys a market economy in which everybody has a chance to get their fair share.
The danger is that the dominant model of globalisation raises overall wealth while at the same time exacerbating insecurity and the popular distrust of elites. Growing affluence for the few coincides with greater division and injustice. The price we pay for more freedom is higher levels of loneliness and social fragmentation.
Faced with this threat to the foundations of our economy and society, Reeves outlines an ambitious and original programme of national renewal. She rightly argues that the Labour Party has to focus on work, wages, the place people inhabit and the wider civic infrastructure that supports small and medium-sized businesses.
For instance, workers deserve the “living wage” or even the “family wage” in order to be able to feed themselves and their loved ones. Dignity in the workplace, which is vital for productivity and people’s sense of self-worth, can be enhanced by stronger rights to collective bargaining and worker representation on both company boards and their remuneration committees. New models of trade union organisation in the “gig economy” are desperately needed.
Other examples include new Royal Colleges for carers, cooks, cleaners and security guards to improve employment conditions and raise the status of these sectors. Key to a more balanced economy that values different talents is to build a high-quality system of vocational training and through-life education offered by a new partnership between employers, trade unions and local government.
For the everyday economy to function and secure our flourishing, what is required in addition to all the ideas in Reeves’ pamphlet is a strategy to take on the monopoly capitalism and the rentier economy. The tech corporations such as Facebook, Google and Amazon dominate not just the economy but also our democracy by controlling access to information and knowledge and by influencing public political debate. Facebook’s dealings with Cambridge Analytica are just the tip of a giant iceberg that could sink competitive markets and democratic self-government.
Today monopolistic capitalism operates at all levels, from the most global plane to the most local shop and high street. It is destroying the everyday economy on which our prosperity and well-being depends. Amazon’s acquisition of the retail company WholeFoods is a harbinger of things to come – not just the domination of the market by one corporation but rather the abolition of existing markets in favour of a new indispensable infrastructure on which both online and offline commerce runs.
Therefore a more effective competition policy cannot be limited to enforcing existing regulation and fining the culprits. The more radical move is to downsize incumbents by breaking them up and by introducing limits on ownership concentration. A Labour Party that tackles the contemporary “robber barons” can go a long way to regain wider popular trust on the economy and help deliver a majority at the next election.
Reeves’s political economy of everyday life charts a robust alternative to the market fundamentalism of New Labour and the Tories while also complementing the economic interventionism of the current Labour leadership. To succeed, it requires an anti-monopoly agenda that breaks up the tech giants and other cartels and distributes both power and wealth to people.
Adrian Pabst is the co-author (with John Milbank) of “The Politics of Virtue: Post-Liberalism and the Human Future” (Rowman & Littlefield).
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