Labour needs to give the private sector the cold shoulder….
One of the things that defined New Labour was the way that Tony Blair and the Blairites fundamentally re-defined the relationship between the Labour Party, the state and the private sector. We were told we must accept the Thatcherite dictum that the private sector was the motor of economic growth and therefore the road to paradise was to allow it to flourish, to be electable, to be credible, there was no alternative. The state, meanwhile, was seen as the Devil incarnate, a model of waste and inefficiency, something whose intervention in economic life was to be tolerated at times as a necessary evil but ultimately it was something that should be diminished. This was what we were told. However, the financial crash and subsequent fall-out has cruelly exposed how blinkered this ideological world view was.
Far from being efficient, the private sector is the model of inefficiency and wastefulness. Overproduction is a running sore and this is drawn starkly into view when credit-fueled consumption hits the buffers. Anybody who has ever worked in the private sector will confirm that management is haphazard and chaotic and more often than not success is achieved purely through good fortune than good judgement. Furthermore, wealth does not ‘trickle down’ at all, the state does not exactly make millionaires of us all but it tends to be better at evenly distributing wealth, and this further damages the economy (for example, what do people seriously imagine poverty pay does for consumption and therefore production, and then, of course, jobs?).
Sadly, this world view led Labour in power to repeat the same mistakes Thatcher made and in that regard, yes it makes us culpable in the crash. We continued the bleed of state money to the private sector, PFI, etc,etc. The logical conclusion of this is the great sell-off of the last few remaining state assets we are now seeing. As things stand, I am not overly convinced we are learning from our mistakes in this area; take Ed Miliband’s energy plan, a good idea in principle but leaving alot to be desired in execution. The first thing that is obviously mistaken is to view something that looks good in Belgium as likely to be as good in the United Kingdom, a much bigger country with much greater energy demands. Obviously, to supply cheap energy in the quantities needed to those who most need it in the UK will cost many times more than it does in Belgium.
Ultimately, while the goal that Ed wants to achieve is laudable, it is not realistically achievable without challenging what causes high energy prices, ie, the private ownership of energy companies; turning the Labour Party into an energy intermediary isn’t the answer. In the long run, this plan will only have a lasting impact if the ownership situation is addressed and even in the short-term it is likely to cost so much, you might as well have spent the money nationalising in any case. This is not to say that should be the last word, ultimately the only way to address this issue is to destroy private domination of the market by using the state to create smaller, but cheaper at the point of provision, energy co-ops. If this is not done then the scheme just becomes another way of pump-priming the private sector which is a disastrous outcome for our economy.
If Ed Miliband is serious about moving on from New Labour then he must once again redefine the relationship between the Labour Party, the private sector and the state. He should snub the wealth-destroying private sector while looking to reinvent the state and what state ownership means. If he uses the state to grow a new co-operative and social economy then not only will the economy start to prosper again but he will have started a quiet revolution in our economic life – one which will change his Party and this country for good and forever.