Blue Labour and economics

The Duncan Weldon Economics Matters Column

Recently I’ve been listening to a lot of PJ Harvey. Whilst I’ve been a fan for decade or so she had dropped off my musical radar until the release of the new album, ‘Let England Shake’, earlier this year. And as the party has been debating the Blue Labour ideas of Glasman, Cruddas, Rutherford and Stears my mind has kept turning back to Polly Jean. The paeans to ‘England’, the nostalgia, the folksy melody and, above all, the sense of melancholy found in Harvey’s most recent work share something with Blue Labour. That said I’m reasonably sure PJ Harvey has not campaigned for the rights of the Billingsgate’s fish porters and I’m convinced that no leading Blue Labour thinker has dueted with Thom Yorke, so maybe the analogy breaks down.

Last night Maurice Glasman spoke at my CLP, debating Blue Labour with the Fabians’ Tim Horton. Both were excellent. Glasman was convincing on how Labour has become disengaged from its working-class core, too keen on pressing progressive, liberal middle class ideals and lost the ability to talk a language of values and reciprocity. Horton made an important defence of the role of the state, something that Blue Labour is often accused of underplaying in its keenness to rekindle community values and associationalism.

Blue Labour’s supposed aversion to the ‘Big State’ has been controversial on the party’s left and welcomed by some on the party’s right. Billy Bragg has gone as far as to accuse Blue Labour of being an essentially free market project.

Glasman is hardly a neo-liberal, something he implicitly stressed at last night’s meeting – talking of the need for the state to endow communities, to challenge finance capital, to legislate for more co-operatives and more worker involvement in company management, and he seems far keener on the state playing a strategic role that his critics allege.

As a political project, Blue Labour is still very young. So it is perhaps unsurprising that it has yet to develop the sort of practical policy programme that will give it further definition. On the big questions of economic policy, whilst some values have been specified, there are still major gaps. Graeme Cook, in an excellent article, has articulated what a Blue-Purple blend of Labour policies might look like, my intention here is to spell out three practical economic policy positions that I think are actionable, worthwhile and in keeping with the Blue Labour agenda as I understand it.

I hope none of them will be described as neo-liberal.

A State Investment Bank

Glasman and his fellow travellers have spoken eloquently about the need to challenge finance capital directly, the need to generate productive private sector jobs and the need for a more regionally balanced economy. As David Miliband said during the leadership election:

“In the last twenty years Labour has gone from the prawn cocktail offensive under John Smith to a love in with financial markets to an election campaign in which not a single business would support our tax policy. Our lack of distinction between the proceeds of financial capital, which was often concerned with its short term multiplication not its long term investment, and manufacturing capital, which was embedded in the real economy, led to a real lack in private sector growth throughout the country. A lack of innovation and initiative, a lack of partnerships and prosperity. We did not sufficiently recapitalise the regions. We did not intensify the redistribution of power. We saved the City of London but we did not reform it.”

He fleshed out these ideas in a tightly argued FT comment article some days later, arguing that Labour should:

“create a British Investment Bank to facilitate investment into infrastructure, support good small businesses struggling to access funding and provide capital for export industries. The bank would be owned by the public, but would raise money on capital markets and be controlled by a commercially-orientated board.”

This strikes me as a de facto Blue Labour policy, one they should be more vocal about.

A Less Flexible Labour Market

Another area where Blue Labour’s ideals have practical application is the labour market and the question of quite how flexible our labour market should be. During the leadership campaign Ed Miliband argued that Labour were wrong to become a party of ‘flexible labour markets’ as this could cause ‘low wages and poor employment conditions’.

The simple ability to hire and fire almost at will does not guarantee lower unemployment, the current problems in the extremely flexible US labour market demonstrate this.

Norway provides another model, whereby adjustment came through average hours worked being reduced, Germany with its Kurzarbeit scheme (by which firms could move full time employees to temporary part-time positions and the state topped up their wages) provides another.

Decent work means more than a Living Wage, it also means security, respect and a sense of continuity – things that a flexible labour market does not provide.

A Different Approach to Globalisation

Finally, and building on the ‘flag’ element of the ‘faith, family and flag’ agenda, there needs to a distinctive Blue Labour approach that globalisation and international economic policy that moves beyond the debate on immigration.

New Labour’s ‘modernising’ anti-nostalgia agenda made for a warm embrace of globalisation, the pushing of global free trade and a lack of concern for globalisation’s losers.

Here Blue Labour thinkers would do well to draw on the recent work of Harvard’s Dani Rodrik. His latest book, ‘The Globalization Paradox’, stresses the need for democratic oversight of markets and notes that the nation-state remains the primary source of democratic legitimacy. This naturally leads him to argue against the trend towards ‘hyper-globalisation’.

In his book he outlines a parable (also on his website) of how trade affects a village economy and shows how through democratic decision making (including some restrictions on open, free trade), the community can better manage the social tensions that international trade creates.

This is in no way a call for an Alterative Economic Strategy-esque ‘siege economy’, simply recognition that markets can only really work within a regulatory context, and that only the state can provide such a framework.

These are of course only ideas, but I think taken together they present the start of a cohesive, values-driven, ‘Blue Labour’ take on economic policy.