Pro-Business, Pro-Worker

Maurice Glasman writes:

The crash of 2008 remains a watershed for New Labour’s political economy.

The reliance on the financial sector and public administration as the twin drivers of growth was revealed as incapable of generating the value necessary for a competitive economy.

There was also an unhealthy reliance on private debt. Of the £1.6tn invested in the British economy between 1997 and 2007 more than 80 per cent was in mortgages and personal loans.

Private debt and the growth of usurious payday loaning was more grievous than the public deficit, which was serious enough.

This was accompanied by a stagnation in wages that intensified the debt pressure on workers whose job security and standard of living were simultaneously threatened.

The value of labour was diminished in three important ways: the percentage of profits going to wages declined; workers had less power in the firm through the marginalisation of unions; and labour was not considered a fundamental value in innovation.

Technology, entrepreneurialism, knowledge, networks – all of these were rightly considered to be sources of innovation but labour was not included in this mix.

The German economy, with its co-determination in corporate governance and pension fund management and its vocational labour market entry, tells a different story.

Neither was it the case that we successfully developed a pro-business position. We were pro-finance and pro-City but there was a lack of private sector growth throughout the regions of England.

My experience of talking to businesspeople is that they make four key demands: less tax, less regulation, more skilled workers and reliable access to affordable capital.

By 2010 we had delivered higher tax, more regulation, an unskilled workforce and the decimation of the regional and sectoral banking systems.

Both capital and the state had centralised power and the age of the oligarchs was upon us. From banking to telecoms you cannot avoid the ‘big six’.

What is required, therefore, is a new pro-business and pro-worker political economy.

This approach is less focused on external regulation and more concerned with relational accountability within the governance of the firm and sector, and less focused on tax and fiscal transfer and more on giving incentives to vocation and value through building decentralised institutions such as vocational colleges and regional banks.

What would such an agenda look like?

First, Labour should champion a partnership model that gives a constructive role to trade unions and to workers in vocational training and corporate governance.

It is necessary to give a primary role to work and labour value in the corporate governance of firms so that there can be an active negotiation of strategy that does not exclusively benefit the managers of firms.

One of the principal causes of the crash was a lack of accountability which led to cheating and excessive risk. The workforce are the only people with internal expertise and an interest in the flourishing of the firm.

A third of the seats on boards should be elected by the workforce. That would also give them skin in the game when it comes to the sacrifices required for profitability.

Second, there should be a decisive change in our attitude to vocation and skills.

Half of our universities could be closed and turned into vocational colleges jointly governed by business, unions and local authorities.

This could renew the skills lacking in our workforce. UnionLearn could yet become the most significant wing of the labour movement.

Third, we should establish regional and sectoral banks so that there is stable access to capital in regions that can support local business with an awareness of their specific needs, which was a key recommendation of Labour’s small business taskforce.

The work that Unite is supporting with the Bank of Salford is commendable and needs to be built on.

Labour needs to value labour and business and seek a common good between them.

That is the new labour political economy.