Gordon Brown took centre-stage recently at Policy Network’s Progressive Governance conference, to discuss upholding Labour’s values in an era of globalisation. Many in the audience of 150 policy-makers, government advisers and experts from Europe and beyond were in awe.
But while the international guests were won over easily, he got a very different reception elsewhere, especially from the media. It was widely remarked that Brown seemed more comfortable talking about ‘global concepts’ and ‘big picture’ issues in an international circle than to Labour voters about ‘bread and butter issues’. Clearly, he must be out of touch with ‘core Labour values’, some went so far as to conclude. That conclusion is flawed, short-sighted and misleading.
Take the ‘knowledge economy’ – a ‘big picture’ concept with global significance. It should be at the heart of Labour’s progressive narrative. But as concepts go, the knowledge economy is not a very popular one. Sceptics see it as elitist, a fashionable bubble similar to the dot.com boom and far removed from core Labour party issues. At best, it is judged too abstract as to be applicable or relevant to a majority of people in Britain.
But this perception could not be more wrong. Knowledge-based industries range from high-tech manufacturing, to financial services, telecommunication and business services to education and health, and also include – if we apply the definition put forward by the EU – cultural services, air and land transport. Yet this industry-based definition does not manage to capture the formation fully, blurring as it does the once so distinct boundaries between manufacturing and services. Knowledge is found throughout the British economy, describing any mainstream economic activity where skilled individuals add value to a firm’s products or services.
This can hardly be described as abstract, or not relevant to the lives of British people. Employment in knowledge-based industries is rising at a much faster pace than overall employment, accounting for half of all British jobs as long ago as 2005.
Admittedly, the whole notion describes rather awkwardly the change in the way we work: knowledge has always been at least to some extent at the origin of ‘value creation’. It also inadvertently implies some degree of polarisation, the very term ‘knowledge economy’ automatically prompting people to ask if there is also a ‘stupid economy’.
But Work Foundation research suggests that the knowledge economy has not led to the dreaded ‘hourglass’ economy with some good jobs at the top and bad jobs at the bottom, nor to new inequalities between those who have access to knowledge and those who do not. On the contrary, the knowledge economy has been good for equality, particularly sex equality: the decline in importance of unskilled work offers new and better opportunities to women as well as men. Surely, that’s highly relevant for the Labour party as well as for their voters.
Though the transition to the knowledge economy is mainly driven by domestic factors – such as growing affluence leading to changes in consumer demand – it cannot be fully understood from an exclusively domestic perspective. It thrives through global economic integration. Britain has emerged as a world leader in trade in knowledge services; they generate a surplus of 3.4 per cent of GDP. Despite populist talk about the next wave of globalisation ‘sweeping’ away British knowledge jobs, globalisation has not only opened up new markets, it also allows Britain to focus on creating better jobs for more people.
In order to continue to be a success story for Britain, the government needs to support all this by increasing investment in areas such as R & D, software and higher education that, although at the core at the knowledge economy, currently form only 3.5 per cent of GDP. It means that that Britain’s investment in knowledge lags behind the US and some other European countries, a worrying fact given that international competition is so fierce. With the next Pre-Budget Report the Chancellor has an opportunity to make the knowledge economy his own.
Rather than being resentful, Labour should rejoice to hear Gordon Brown talking passionately about his vision of Britain in a globalised world and encourage him to match rhetoric with action. After all, it is vision that drives policies and not the other way round and the knowledge economy, if made relevant to people’s lives, offers a clear narrative for Labour’s vision of economic growth and social justice.