Editorial - New economic policy: vision required
Britain’s political classes are worryingly complacent about the state of our economy. They act as if Britain remains an economic powerhouse when the reality is more pedestrian. Despite pockets of strength, the fundamentals of the economy are creaking. Real income growth is slower than at any point since the mid-19th century. Productivity growth remains sluggish. Living standards are declining. The housing market is failing to deliver, deepening regional and intergenerational inequalities. Strikingly, while inner London is the richest region in the EU, most of Britain is now poorer than the European average.
The situation would be much worse were it not for the monetary policy life-support machine of the post-2008 economy. Yet quantitative easing and zero interest rates can only hold us in suspension for so long, even as their distortive consequences accumulate. Economic turbulence is bound to follow their eventual unwinding. Meanwhile, the complexity of negotiating a new relationship with Europe is fraught with difficulty and the outcome, though uncertain, will almost certainly be challenging.
“...quantitative easing and zero interest rates can only hold us in suspension for so long, even as their distortive consequences accumulate”
This reality demands levels of honesty and imagination to match previous epoch-defining crises. Yet we have a governing party whose adherence to outworn orthodoxies and stuttering management of Brexit risks exacerbating our underlying economic problems. Far from unchaining Britannia, an abrupt and disorderly exit from the EU will leave us exposed. A prescription of austerity and de-regulation would only worsen the condition.
For progressives, an uneasy truce has settled on questions of domestic political economy, even as battle lines are being drawn on the European question. Temporary calm should not slip into complacency. The party manifestoes – which for the most part fought yesterday’s battles – attest to this. Understanding how emerging economic, social and technological forces are shaping tomorrow’s world is crucial to realising a more equitable and plentiful future. Much work is needed on this front.
“For progressives, an uneasy truce has settled on questions of domestic political economy”
This IPPR Progressive Review party conference special examines the state of the economy and asks how our politics should confront and improve the UK’s economic fundamentals. Tom Kibasi’s essay explores the central themes of the IPPR Commission on Economic Justice, arguing that the British economy needs deep structural reform, guided by a new vision for the economy, where long-term abundance delivers justice for all. Miatta Fahnbulleh makes a similar case: with living standards stagnant for many, the fight against inequality needs to be reframed as a majoritarian issue, with deep structural reform of the economy as the means to a fairer world.
In our interview with Elizabeth Anderson, we examine the private government of the workplace – riven with inequalities of power and voice – and ask her how the constitution of the workplace should be reimagined. One of the world’s leading moral and political philosophers, Anderson’s vision of egalitarian and democratic working practices is compelling and timely. Rethinking the politics of work is central to Kate Bell’s examination of the Taylor Review. In a world in which the scales of power have been increasingly tilted in favour of employers, she argues that the review, while containing some welcome recommendations, was a missed opportunity and that more is required to rebalance the scales toward workers.
If power imbalances at work are growing, Stewart Lansley’s essay argues that today’s dominant model of corporate capitalism is defined by a built-in inequality escalator that creates a ‘fundamental force for divergence’. His solution: new models of common ownership to provide a countervailing weight against trends towards disequalisation.
Opaque and unregulated algorithms that are not as neutral at they might seem, power imbalances hidden in the platform economy, pervasive data surveillance: the manner in which technologies reinforce and expand hierarchies of control, wealth, and knowledge sits at the heart of Cathy O’Neil’s conversation with Leo Hollis.
Progressive politics has much to do in responding to these forces. While Labour committed to taking the utilities and rail companies back into public ownership, the commanding heights of the digital economy were left untouched. Other parties were similarly quiet. Yet without new policy thinking we risk sleepwalking into a world in which the infrastructure of the digital economy, its rules, and the power that resides in that control, is shaped and controlled by a few multinational companies. This is the new dominant economic position that progressives need to understand, and their response will require a more sceptical, less naïve engagement with emerging technologies and companies: ‘beware Californians bearing gifts’ should be the motto of the digital age.
How can we build a democratically governed and owned data infrastructure that produces greater equity and genuine innovation? Can platforms be governed with more co-operative approaches to ensure labour enjoys security and voice alongside flexibility? And how should we regulate unaccountable, private algorithms, laced through with questions of economic power? Public policy must urgently grapple with these questions.
“...we risk sleepwalking into a world in which the infrastructure of the digital economy, its rules, and the power that resides in that control, is shaped and controlled by a few multinational companies”
At the same time, the spectre of automation provokes breathless commentary, much of it almost certainly exaggerated and at odds with our current economic challenges, at least in the short term. In the decades ahead, a suite of rapidly improving technologies, from large-scale data analysis to advanced robotics, threatens a world of spiralling inequality rather than the mass joblessness currently at the heart of ‘rise of the robots’ debates. Automation risks accelerating returns to capital as the owners of technologies reap the rewards, while further polarising the labour market as the nature of work is transformed. Avoiding a future of deepening inequalities will require new models of common ownership to ensure technological change doesn’t simply reproduce existing inequalities, but expands and democratises its proceeds. Indeed, it may only be through such models that we could realise the transformative potential of these technologies, rather than leaving our future in the hands of Silicon Valley.
For now, Brexit is convulsing and reshaping British politics and its institutions. The final outcome remains uncertain. Our new relationship with Europe will have vital consequences for all. Yet this should further compel us to face up to the flaws in the UK’s economic model, a model that is failing to deliver for the vast majority of people. Avoiding this fundamental truth will only compound the reckoning, all the more so given the polarising implications of technological change under a business-as-usual scenario. We hope this issue of IPPR Progressive Review helps progressives face up to the economic challenges ahead and remember that they are strongest when called to be architects of the future, not its victims.
Mathew Lawrence and Carys Roberts are editors of IPPR
Tom Kibasi is IPPR director and chair of the IPPR Commission on