Labour needs to reform the economy, not just defend the state

By Jon Wilson / @jonewilson

As we frame a response to the biggest public sector cuts since Lloyd George, our Labour instincts lead us to defend the state as the greatest source of welfare and justice in Britain today. After all, the public sector is a world we know. Most of us (me included) work in it; it’s likely our parents did too.

But it’s those public sector instincts that, frankly, make the Labour Party look a bit weird. Most people in Britain rely on the state, but they don’t work for it. Their livelihood comes from the market economy. Both Labour and the Tories seem to have forgotten that it is the market economy that places the biggest stresses and strains on family life. It is time for Labour to return to the idea that its job is to tame and democratise the market to provide Britons with the conditions to live good, decent lives.

When it has been most successful, Labour’s story about creating a fairer society has drawn support from people across different social groups and sectors of the economy. Labour values aren’t only public sector values. There are good private employers, whose employees work together for the common good – just as there are bad private sector organisations.

Labour’s revival in opposition needs to based on the idea that solidarity and mutual support, not just state provision, are essential for the creation of a better society. That means vigorously attacking coalition cuts. But in challenging the coalition, Labour’s public sector instincts are our greatest point of weakness. They mean Labour can sometimes appear as a party that puts workers in the public sector above everyone else. It makes it hard for us to appear as a movement concerned with the common good. In the education debate at conference this year, teacher after teacher talked about the devastating effect of Conservative policies without a single parent or student’s voice being heard.

And Labour’s public sector instincts influence Labour’s style of doing things. Emboldened by a genuine but abstract sense of the public good, New Labour had the tone of a bossy teacher. We’ve all sat in too many party meetings where middle class members are only too happy to tell our working class voters what to think and do. But even when New Labour was trying to improve ‘consumers’ experience of the state, its approach was that of the know-it-all manager telling another public sector worker not to do. Teacher knows best, even if what teacher tells you is that you have to choose for yourself.

There is nothing Labour about bureaucracy. We must admit that in many places the state is bloated: there are too many officials writing strategies and reports that don’t actually make life for citizens better.

At the moment, when you talk to people on doorsteps about their financial situation (as we’ve started to do in Greenwich) it is the difficulty of making ends meet in the private sector economy that is the greatest concern. Instead of obsessing about the state, Labour urgently needs a practical story about how we can make the economy fairer. After all jobs in the private sector allow most people to make ends meet.

So, it’s essential that the case we make against the coalition’s savage cuts shows how they will hold back economic growth, and will prevent every sector of society from contributing to the economic recovery.

But growth will only work in the interests of society as a whole if Labour finds the courage to challenge the way capitalism works in Britain today. We need to push back the values of the free market, and show how a reformed economy can provide a good living for our citizens. That doesn’t just mean greater regulation. More importantly, it means giving ordinary working people the power to hold the firms they work for and buy things from to account. It is not just the state but the economy which needs to get more democratic.

The Living Wage is a good start, showing the human limit below which capitalism cannot go. Democratising the economy also means campaigning for more apprenticeships to protect skills and give people a more long-term stake in the sector they work in. It means democratically-run regional investment banks that ensure capital is spread throughout the whole of Britain, not just walled up in the City of London. It means works councils and employee representatives on every board of directors which would direct firms towards long-term sustainability not short-term profit.

It’s time to get back to the idea that being Labour is making sure the economy provides a decent life for all – not just defending the state.