Ed Miliband’s ‘producers and predators’ metaphor has been wilfully misinterpreted. But it must be shown to have real-world application

Ed Miliband studied economics at Corpus Christi, Oxford, gained a Master’s degree in economics at the London School of Economics, and taught economics at Harvard, before becoming chair of the Council of Economic Advisers at the Treasury. It would not be wholly unfair to describe him as an economist.

When he set out his economic views to the Labour party conference this year he faced the difficult task of distilling terabytes of economic knowledge into a few minutes’ worth of rhetoric. This is how he did it: ‘Let me tell you what the 21st century choice is: Are you on the side of the wealth creators or the asset strippers? The producers or the predators? Producers train, invest, invent, sell. Things Britain does brilliantly. Predators are just interested in the fast buck, taking what they can out of the business. This isn’t about one industry that’s good and another that isn’t. Or one firm always destined to be a predator and another to be a producer. It’s about different ways of doing business, ways that the rules of our economy can favour or discourage.’

Just in case it has slipped your mind, the ‘predators and producers’ line echoes the work of Hershel I Grossman, Brown University’s neo-Keynesian professor of economics until his death in 2004. His paper, Producers and Predators, published in the Pacific Economic Review in 1998, considered a series of general-equilibrium models in which people can choose to become either producers or predators. I am sure you remember it now your memory has been jogged.

The line, therefore, was not merely a useful alliterative rhetorical device, with a pleasing symmetry, designed to frame a political argument. It was an expression of a complex economic theory. And that is the problem with being the cleverest person in the room, especially when the room is the main hall at Labour party conference. Almost no one listening, with the possible exception of Rachel Reeves, would have ‘got’ the reference. Instead, the ‘producers and predators’ line was read in one of two ways.

The first was a green light to every leftist to dust down the old language about bosses, expropriators and alienation. It provided an excuse for the Blair-booers to engage in something far more deadly: a vocalisation of their loathing of private businesses, profits and the rich. It tore up the 1997 Labour manifesto’s commitment that ‘we see healthy profits as an essential motor of a dynamic market economy’ and the 1994 Clause IV belief that ‘a dynamic economy, serving the public interest, in which the enterprise of the market and the rigour of competition are joined with the forces of partnership and cooperation to produce the wealth the nation needs and the opportunity for all to work and prosper with a thriving private sector.’ It opened the portal in the space-time continuum and returned Labour to the days of the longest suicide note and Miliband’s summer job boss Tony Benn.

The second response to the ‘producers and predators’ line was ridicule. Waggish journalists toured the conference bars asking if people were producers or predators. Andrew Neil immediately picked up the false divide between producers and predators, when a successful and well-loved brand such as Weetabix is owned by Lion Capital, a private equity firm. Does that make Weetabix good or evil? The complexity of the message was lost in a false binary choice.

Both responses are wrong. On the first, Labour is not going to return to the days of being anti-business. The long march under Neil Kinnock, John Smith and Tony Blair is a one-way journey. Few in the modern Labour party believe that you can have a successful society without a vibrant, growing private sector. To have an effective public sector, you need a profitable private sector to pay for it. On the second, ridicule is an unfair reaction to a laudable attempt to shape an argument. Ever since Edward Heath identified the ‘unpleasant and unacceptable face of capitalism’ there has been a debate about whether governments can tame capitalism. Even Margaret Thatcher believed there should be some rules.

Miliband is right to want to create a capitalism with an ethical dimension. The explosion in fair trade, environmentally friendly products and corporate social responsibility in the past 20 years proves such a thing is possible. The acceptance by profitable, growing UK firms of the national minimum wage, workplace rights and other changes under Labour show that business can adapt. But if Miliband wants a capitalism with ethical boundaries, he must sublimate the economics theory, and demonstrate what he means. It is only through practical policies, which resonate with the British people and address their insecurity, that he will be able to win the argument and stand a chance of putting his ideas onto the statute book.

He needs to stop speaking like an economist and learn how to communicate complex economic ideas in a political arena. Unfortunately, they don’t teach that at Harvard.