We were pleased to be joined by Patrick Diamond for the launch of the Commission on Socialism and Capitalism. Below I explore some of the topics which were raised at the launch and consider how it is possible to start grappling with the challenge of developing a political economy for the left in the 21st century.

A difficult partnership

Considering the question of what socialism and capitalism will mean in the 21st century is an intimidatingly large subject. Due to the potential size and scope of the project it would be easy, for the purpose of simplicity, to regard them as opposing ideologies, each defined by their opposition to the other.

I was very pleased that at no stage was this simplistic definition proposed. In his opening remarks on the subject Patrick Diamond shared with us his thoughts on the relationship between these competing ideologies. Far from being opposites, he suggested that socialism was in the (perhaps uncomfortable) position of being to a significant extent reliant on capitalism to achieve many of its goals.

Socialism, and its various offspring, all entail a critique of capitalism and the outcomes which unbridled capitalism produces. But they simultaneously rely on the growth and prosperity produced by capitalism to achieve their goals of fairness and prosperity for all. We can trace this uneasy tension through New Labour, social democracy in the post-war era, and all the way back to Marx (who recognised that the achievement of his socialist utopia was first dependent on capitalism reaching a sufficiently advanced state). Each of these variants of socialism approached this tension differently, but the fundamental question lies at the heart of each of their approaches to political economy.

As we seek to develop a political economy for the left in the 21st century we need to consider how the left should moderate capitalism, but also how capitalism can support the left in achieving its goals. In short, we must take a pragmatic approach to capitalism and seek to make it work for us.

One Nation Labour’s approach to political economy

One Nation Labour marks a significant break with the New Labour era and this break is most obvious in relation to political economy. Two specific themes in One Nation Labour’s thinking focus on political economy and make explicit the break with New Labour. First, One Nation Labour entails a greater recognition of the nature and extent of market failure. Second, it shows much greater concern towards issues of inequality and the distribution of goods and rewards in the economy.

New Labour was inclined to view market failure as an exception. One Nation Labour sees market failure as systemic. The failure in the banking sector was the first area where this became apparent; however, this view of systemic market failure has expanded to encompass the energy markets, the private rented sector, and the railways.

Ed Miliband has also demonstrated a much greater willingness to talk about issues of distribution and the importance of equality for both the type of economy and the type of society we wish to create. This concern for inequality is manifest in senior Labour figures’ interest in Scandinavian models of political economy, which are seen as inherently fairer than our own.

How to intervene in markets

Where do these insights leave us in terms of developing an economic philosophy for the left in the 21st century? And what are the issues which the Commission will be required to explore in the coming months?

A number of broad policy areas were discussed at the launch. These included the renaissance of nationalisation as a model for public utilities, greater state intervention to develop an active industrial policy, the role the left can play in championing consumer issues, innovative ideas about how to build a more popular and democratic capitalism, and reflections on the concept of pre-distribution.

Attendees also raised a broad range of challenges facing the left: how to respond to increasing technological developments and the impact these are having on the nature of work; how to intervene when the market price for a good fails to correspond to its social value (e.g. social care); and how to achieve the institutional and cultural change (e.g. promoting different types of business) required to reform capitalism in the ways we might desire.

In terms of developing a coherent economic philosophy these issues do not coalesce neatly. However, they do force us to consider more deeply what it means to intervene in markets and the different options available for intervening. Some of the policy proposals rely on grounds which will be familiar to the left in terms of intervening in the way markets directly operate, such as nationalisation and an active industrial policy; others will be more challenging for the left, such as the proposals designed to build a popular capitalism by spreading wealth and empowering citizens as consumers in a more egalitarian marketplace. Both of these threads offer the Commission some fruitful grounds for consideration as we develop our ideas for what a left political economy could look like in the 21st century.