Bringing the Rhine to the Tyne: why Ed Miliband is right to reinvigorate social democracy

by David Mathieson

Moving to the left, deserting the middle class and betraying wealth creators. The Tory attack lines from Manchester this week are all too predictable and have been well rehearsed by their comentariat over the past few days: the “Red Ed” strapline is back in vogue as they pick up on elements of Miliband’s speech proposing a new social and economic bargain.

So what is it that so upsets the British right about what Miliband said? An economy which accommodates values other than just those of the market? A recognition that firms have obligations beyond shareholder value? One of the few solid proposals in Miliband’s speech, a worker representative on pay boards, would hardly raise an eyebrow elsewhere in those parts of continental Europe where a more inclusive Rhineland model of capitalism holds sway.  Miliband explicitly did not reject market capitalism but merely argued that our existing economic model needs to be redrawn: what the Labour leader is effectively seeking to do is bring some of the Rhine to the Tyne.

Why Miliband’s arguments for a new economic bargain should set the Tories ablaze is baffling for two reasons. First, because the Rhineland model is a creation of the right rather than the left. Post-war German politics, for example, have been dominated by the Christian democrats of the CDU, not the social democrats of the SPD (political disagreement in the country seldom touches the economic model which is supported – in every sense – by both major parties). Switzerland may have some red in the national flag but that is about as far as it goes – Zurich and Lucerne are not bastions of the left. The Benelux countries are notable their for caution, coalitions and consensus.

The second reason for Conservative fury is equally bewildering. Most British families understand that our economic model is broken and they are looking to their politicians to fix it. Labour may trail the Tories on the issue of the economy in the polls, but Osborne’s ratings are dismal. Voters will reward those who come up with a solution which chimes with their own values.

And what is the Conservative answer?  It is remarkable how little discussion there is in Tory circles of economic examples from other countries – even where their sister parties are in power. Perhaps it is the embedded Euro-sceptism of today’s Conservative party which stubbornly refuses to believe that the UK has any lessons to learn from continental Europe. It is illuminating that Tories in the European Parliament still prefer to sit with the jetsam of the European right (or “nutters” as Nick Clegg calls them), rather than the mainstream Christian Democrats. Or perhaps the implications of a communitarian capitalist model sustained by some moral principles as well as Mammon are too much for the Thatcherite faithful. Either way, the problem is one for Cameron not for Miliband. The prime minister is caught between his own belated recognition that there is such a thing as society which interacts with the economy and those in his own party who, like so many latter day Bourbons, have forgotten nothing and learned nothing.

Against this, Miliband deserves some credit for trying to move the debate on. Capitalism comes in many forms and the current crisis demonstrates that some are more successful and more sustainable than others. The jazzy riff of the credit driven Anglo-Saxon economic model has been met by a solid supply-side oompah from the Rhineland. While it was fashionable in Britain (by some on the left as well as those on the right) to deride the then ponderous growth of other European economies just a few years ago, one lesson of the crisis seems to be that in terms of enduring wealth creation the continental model is more effective in the long term. Tory ministers wring their hands and lament the closures at Bombardier or BAe and their counterparts in parts of Northern Europe wonder where they can find enough skilled engineers for the needs of the local economy. What greater contrast could there be?

David Cameron and George Osborne call for a rebalancing of the economy which will encourage manufacturing as opposed to financial services but it is Miliband who has absorbed the full implications of this faster than his opponents. Building a successful economy in the twenty first century requires more than a quantitative strategy – it also requires a change in ethos, much of which is embodied in the Rhineland model.

Over the past few months, I have been visiting several of the famous small and medium sized firms which provide the vertebrae of the German manufacturing dynamo. The thousands of these “mittelstand” companies, many of which produce high quality components for niche markets, are not simply products of cohesive communities, but unquestioningly accept it as part of their duty to strengthen those communities. A typical example is Ziegler whose factory is set amongst the cherry orchards on the outskirts of a village which looks as though it could be home to Hansel and Gretel.  But this is no rural fairytale – Ziegler is a modern company competing in a tough global market producing aircraft components. Co-owner Marcus Ziegler tells me that, like most of the mittelstand, they are a family company and that this offers important advantage. With no shareholder demands for ever increasing quarterly returns, they can focus on investment for the future.

“It is like planting a tree”, he says, “maybe we don’t see the benefit, but it will sustain the company here in years to come”.  Another key element is the relationship with the workforce: “everyone in the company knows everyone and people tend to stay with us – so it is like an extended family”.  As a consequence the skilled workforce, trained within the company, can respond flexibly to changes in the business environment and problems are sorted out fast.

It is a story that has been told to me time and again by those working in the mittelstand: inclusive companies with long term strategies integrated into their communities aiming at sustainable growth.  Miliband needs to put a lot more flesh on how these things would look in the British, context but if this is what he is driving at the Red Ed tag looks even more ludicrous. Frankly, he’d be better described as Steady Eddy.

David Mathieson is Chair of Labour International, the “CLP” for the 800 Labour members who live overseas.

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5 Responses to “Bringing the Rhine to the Tyne: why Ed Miliband is right to reinvigorate social democracy”

  1. Nick says:

    Most British families understand that our economic model is broken and they are looking to their politicians to fix it.


    The problem is Labour broke it.

    1 trillion in borrowing
    1.3 trillion to the civil servants
    2.4 trillion for the state pension.
    0.4 trillion for PFI,

    Total 7 trillion

    all unfunded – no assets to back them up. [Unless you treat people as slaves]

    State taxation 0.55 trillion

    Massively geared, and that ignores the core spending any government needs to make.

    That’s the legacy for the next generations. Debt. Just the same as third world dictators.

    Meanwhile Labour’s strategy on companies is this.

    Go ahead, take the risks and make profits. If you do, we will take over 50% of the money, but if you lose we won’t take any of the losses.

    In other words, to quote Ed, the biggest something for nothing scam in the world.

  2. Mike says:

    It’s a great article, but the Right were not ‘upset’ by Ed’s speech – they were delighted.

  3. The Future says:

    Except that the polling shows that the country see’s Ed Miliband as as Right wing as Cameron is. Which is not that much!!

  4. swatantra says:

    I find it incredible that Ed is being attributed with thoughts on altruistic political science that he probably wasn’t even aware of. All he wants to do at the present time is not change society but trash Cameron and the Coalition, which isn’t at all a bad things. The political science bit and all the theorising can be left till later.
    You don’t introduce radical change in the middle of a crisis.

  5. rob the cripple says:

    Interesting of course we know a bit different, your talking about the larger factories in Germany.

    But the only people to get any Min wages are given to building workers and postal workers:

    none, except for construction workers, electrical workers, janitors, roofers, painters, and letter carriers; set by collective bargaining agreements in other sectors of the economy and enforceable by law[9].

    For example in my fathers home they have a factory which makes parts for cars and these people get well below the min wage in the UK, it’s easy talking about the Niche market because they tend to be high skilled and higher paid then say a bloke running a machine making door handles and to compete with factories in say the UK they have to pay lower wages.

    Migrants pay was shocking up until two years ago, then after many of the Unions demanded a bigger say for migrants the pay went up it’s still below the wages in the UK.

    Unions tend to be more unlikely to strike in Germany when they do here, but look out when they do.

    But sadly they are very picky who they allow in. When I went to visit my family in Germany I had a hell of a job getting in because I had a disability, they even said I wanted to settle in Germany to put pressure on the health service.

    So Germany would never be like the UK and the UK would never be like Germany, although in welfare and getting rid of the sick and the disabled it’s possible you could talk to each other

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