Labour’s populism is all about redistributing wealth. Creating it matters too

by Jonathan Todd

Labour forms a majority government, Alan Milburn wrote in the FT on 13 April, when focused as much on creating wealth as distributing it. Pat McFadden used a very similar line when speaking to Newsnight the same week. McFadden used to work with Peter Mandelson as a minister at BIS. Now Chuka Umunna is shadow secretary of state to this department and consciously echoed Mandelson when he recently said: “I don’t have a problem with people making a lot of money, so long as they pay their taxes.”

Similarly, I’ve argued that Labour should focus on growth as well as the cost of living; in other words, making the economic pie bigger, in addition to sharing it more equitably; being a party of increased production, not simply fairer distribution. Whether when Harold Wilson proclaimed ‘the white heat of technology’ or when Tony Blair unrelentingly championed aspiration, Labour has advanced as a party of growth and production. This is not to downplay the redistributive gains that Labour made during these periods. We had our first statutory minimum wage under Blair and got rid of the eleven-plus under Wilson.

These redistributive gains were facilitated by Labour’s strength on production. In crude policy terms, when economic growth is robust, it’s easier to find resources to redistribute to the less well-off. The politics are simpler too. Voters are less likely to withdraw their support from a redistributive party for self-interested reasons if they are reassured that this party is also capable of delivering the growth that will help their back pockets.

The populist rationale behind Labour’s price freeze, as I noted soon after it was announced, never arrives at a full stop. The door is always open to going further. If that is what the people want. I speculated that the owners of Premier League clubs, private landlords and brewers may look at Miliband and wonder where his attack will go next. One out of three right, so far. But I carelessly overlooked rail operators, always a likely target for Miliband’s populism.

And what’s not to like? How can populism be unpopular?

If it is arbitrary, then it won’t be popular with businesses. Which will have something to say about the general election. And if it’s arbitrary then it might appear laced with retribution, bringing Labour closer to living up to Fraser Nelson’s recent description as “an angry party itching to exact vengeance on a growing list of enemies”.

If this combines with a sense that Labour has little to say on growth, then Labour seems to offer a world where the economic pie doesn’t grow but you get more of it if your face fits and less if it doesn’t. In this scenario, the potential unpopularity, divisiveness and inefficiency of Labour’s populism becomes more apparent.

This scenario is avoided by Labour’s populism avoiding arbitrariness and the party being as strong on growth as the cost of living. There are cases for greater public ownership on the railways and tougher regulation of private landlords. But these cases should be made soberly, not with relish. And they must be aligned with an explicitly pro-business growth strategy.

Conservative or predominately Conservative governments were in office for fifty of the seventy years that followed the Labour party first becoming the official Opposition in the House of Commons, David Marquand noted in the 1990s. He contrasted this with  the two-party system which prevailed from 1868 to 1918 – the system of Conservatives versus Liberals. This produced a total of twenty-seven years of Conservative or Conservative-dominated government, against twenty-three of Liberal. Liberal England may have died, Marquand observed, but Labour England has failed to be born.

When Labour England has sparked into life – as under Wilson in 1966 or Blair in 1997 – it has rebuilt the coalition that the Liberal party once held. This coalition never saw itself, as Labour often has, as exclusively the defenders of a particular class interest. It reached across classes – campaigning and governing for all of them. Finding common interests between workers, managers and owners.

These different interests form one nation when harnessed in pursuit of shared goals, such as growing national wealth. If we appreciate how fleetingly Labour has succeeded in reconstructing the Liberal coalition, we recognise how deep the historical roots supporting Milburn’s conclusion are. And how profoundly we mock this goal with the class-based politics of Labour’s latest party political broadcast. It would require a very generous interpretation to see this as evidence of intellectual self-confidence. Labour needs much more to disabuse Nelson’s charge that we are a vengeful party.

The exports of the west Midlands have grown by 18% in the past year. The GVA of the creative industries has increased by 15.6% since 2008, compared with 5.4% for the economy as a whole. Employer owned businesses offer new sources of innovation and prosperity.

Rather than anger, Labour should have optimism, grounded in a clear account of how these and other successes would be accentuated under Prime Minister Miliband. The alternative is that someone like Umunna attempts to reconstitute the Liberal coalition in the next parliament.

Jonathan Todd is Deputy Editor of Labour Uncut 

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2 Responses to “Labour’s populism is all about redistributing wealth. Creating it matters too”

  1. aragon says:

    Redistribution is a growth policy, we cannot all serve the whims of the super-rich, over the last thirty years the wealth of the super-rich have grown at the expense of the rest. To now to cry foul is apparently vindictive or the politics of envy.

    Lets just look at some of the monopolies sponsored by Government:

    Bankers looting the economy and crashing the system yet again, Premier league clubs like the ‘Creative industries’ who’s GVA you praise, benefit from a copyright and distribution monopoly lasting life plus seventy years and growing. Property prices just part of the banking cartel where ever high loan to income multiples allow ever inflating property prices with Government bailouts when the bubble bursts and with ‘Help to Buy’ the Government does the inflating, when even the banks won’t play the ponzi scheme…

    Brewers: well pub-cos, tied houses, restricted supply agreements, over leveraged property: small fry but add them to the list, if you want.

    The fat cats have got the cream, the milk and are now complaining about missing out on the spillage.

    They all derive wealth from the Crony Capitalism (Corporatism) and Oligarchy, that passes for Democratic Government in this country.

    It was ever thus…

    Ed Miliband does not grasp the full picture and would not act.

    Economist are just the apologists for the super rich, we can do better than this!

    As the French might say: ‘Madame La Guillotine’, ‘the Terror’ is not complete. liberté, égalité, fraternité.

  2. Ex labour says:

    If ever voters needed a reality check on how out of touch and rooted in the past some Labour supporters are, then just read the above. I really don’t need to comment further.

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