‘There are good and bad businesses. Labour needs to be able to explain the difference’

When Ed Miliband outlined his distinction between productive and predatory capitalism in a speech at the 2011 Labour Party conference it was quickly dismissed as anti-business. The Financial Times accused him of being ‘misguided’, ‘vengeful’ and ‘someone who sees business as a foe, and not an ally’. The pushback was made worse by a lack of clarity over what that distinction actually means in practice, and an absence of concrete examples. What was productive and what was predatory? The distinction was eventually abandoned in favour of a much more cautious strategy designed to signal Labour’s pro-business credentials.

Although it was too vague, muddled, and adversarial to translate into a coherent governing project, Miliband’s productive/predatory framing tapped into the intuitions of a public distrustful of an economic system that seemed to reward powerful, exploitative businesses at the expense of ordinary working people.

That sense is even more pronounced now than it was back then. New polling from the Fairness Foundation indicates strong public support for businesses that create wealth through innovation and long-term investment, and strong opposition to business models that are seen as ‘extractive’ or, put another way, predatory.

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In a nationally representative poll, respondents were shown eight fictional businesses that had all doubled their profits, but in very different ways, and were asked whether those profit making strategies were acceptable, whether they created wealth or extracted it, whether they worked within the system fairly or took advantage of it, whether they had a positive or negative social impact, and whether they should be encouraged or discouraged. Across all five questions, the pattern was remarkably consistent. The public wants businesses that innovate, invest, and expand the productive frontier. They don’t want businesses that appropriate existing wealth, and/or prioritise short-term profits.

For example, the fictional firm “Tocrad”, that makes a quieter, cheaper, more efficient hairdryer, is overwhelmingly seen by the public as acceptable (64%). By contrast, two-thirds of respondents saw a regional water monopoly that hikes bills while loading up on debt as unacceptable, likewise a ticket scalping business that uses AI to buy up gig tickets and resell them at a markup. These responses reflect a basic sense of fair exchange. You shouldn’t be able to make money simply by exploiting captive customers or manufacturing scarcity.

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The public is also hostile to business models built on tax avoidance, whether carrying out schemes to shrink liabilities or selling advice on how to exploit loopholes intended for socially useful purposes such as R&D relief. These practices attract strong net disapproval. And when asked why these mechanisms are unacceptable, the most common answer, by far, is that they are exploiting consumers, workers and society.

Not everything that feels extractive produced total consensus. Views were mixed about a company that buys up struggling accountancy firms and boosts profits through redundancies, and the public are somewhat ambivalent about a dominant online retailer using its market position to drive down the prices it pays suppliers. Those responses are a warning against simplistic moralising. But they are also an invitation to do the hard work Miliband didn’t do, which is to spell out more clearly what constitutes genuine wealth creation and wealth extraction, and why making that distinction matters.

If Labour wants a new economic story, it knows where to find one.

There are good and bad businesses, and the government, especially a Labour government, should have the confidence to tell the difference. The reason why the economy seems so unfair and rigged in favour of vested interests is because widespread wealth extraction has been ignored, at the expense of rising living standards and genuine wealth creation.

In telling that story, Labour should anchor its language in specific, everyday examples that map onto these public instincts. It should build a coherent set of policy interventions around those sentiments, by championing examples of innovation and long-term investment, and tackling monopolies, extraction and tax avoidance. That might include using procurement to back firms that invest, train and pay properly; supporting R&D and diffusion so innovation becomes the normal route to profit; and encouraging patient capital and long-term corporate governance rather than short-term profiteering.

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The government is already taking steps in this direction, and it should say so more plainly. The polling suggests people are not hostile to profit; they are hostile to profit that feels unearned, unfair, and disconnected from contribution.

The lesson from 2011 isn’t that Labour should never draw distinctions about the economy. It’s that it needs the know-how to name the good and the bad, and build policy, and a narrative, around that difference.

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