THE GUARDIAN EDITORIAL Reforming capitalism: from controversy to consensus

Jan 3, 2019

The claim that Britain’s economic model is systemically unjust was recently deemed radical and extreme. Now it is indisputable. 

Ed Miliband is not often cited among the big winners in British politics. His five-year term as Labour leader ended in a humiliating election defeat. But that does not necessarily invalidate arguments he tried to make about injustice built into the UK economy, the systematic depression of wages and a short-term profiteering culture that spread insecurity and inequality. Mr Miliband’s analysis has subsequently been vindicated, to the extent that many Conservatives now talk about a crisis in capitalism. When Labour figures use that kind of language, the Tories denounce it as a slippery slope towards Bolshevism.

In a polarised political climate it is important to build on areas of consensus, so a substantial and non-partisan economic reform programme, published this week, should be welcome across the political spectrum. The Institute for Public Policy Research thinktank issued the final report of its commission for economic justice, bringing together business leaders, economists, trade unionists, representatives from the worlds of technology, finance, charities – and the archbishop of Canterbury. Justin Welby’s presence on the panel is a reminder that economics can, or should be, an ethical pursuit as well as a technical one.

An undertaking of this kind, drawing from so many sources, could easily produce platitude, but the IPPR panel has coalesced around some bold, concrete ideas. Among the prongs of a 10-point plan are proposals to raise the minimum wage, rebalance the tax base so those with amassed wealth in capital and assets pay more, and replace business rates with a land value tax. The IPPR hails from the liberal-left tradition and, while it is no longer as close to Labour as it has been in the past, some of the commission’s ideas land outside Tory comfort zones. Theresa May is unlikely to embrace the recommendation to expand collective wage bargaining, for example. The tax proposals are too redistributive for many Conservatives.

But there are other areas where the commission is aligned with some of Mrs May’s interests: the call for an industrial strategy to rejuvenate manufacturing; the push for more housebuilding; the emphasis on corporate governance, so workers’ voices are heard on boards and remuneration committees; the need for a new regulatory framework to confront the extraordinary power of giant, multinational technology companies. Those are all policy areas in which the prime minister has dabbled, although in every case an initial burst of activist rhetoric has been followed by timidity in practice.

That reflects Mrs May’s lack of a parliamentary majority, her lack of imagination and her lack of governing capacity to do much of anything besides Brexit. The last of those factors would impede any party in power. A large part of the tragedy of Britain’s proposed departure from the EU is that it consumes so much energy and so many resources that might be better deployed addressing the causes of anger, frustration and insecurity that provoked many people to vote leave in the first place.

But the shortage of political bandwidth does not remove the need for serious, practical remedies. Sadly, since Brexit offers no solution to problems of the unjust distribution of wealth and opportunity, the demand for viable policies in that area is certain to grow. The IPPR’s commission on economic justice is reporting at a time when British politics is ill-equipped to respond to its recommendations, but the insights it offers deserve a government capable of engaging with them.

This article was published by The Guardian

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