Frustrated Labour moderates are always heard proclaiming the need to deliver a ‘pro-business’ message before the next election, in order to capture those middle-ground votes and 10 per cent swing. While probably true, it does raise an important issue – how can we balance the interests of private enterprise with progressive politics?
It is a question that has troubled Labour since the financial crash of 2008, when the financial meltdown exposed the worst excesses of global capitalism. Since then, the party has struggled to balance the fears and frustrations of its traditional support base, alarmed at increasing wage inequality, with the demands of the aspirational for growth and opportunity. In the build-up to the election, Ed Miliband proposed a compromise by supporting ‘good’ business while holding ‘bad’ business to account. As with much of Ed’s campaign an interesting principle was lost behind an ill-conceived soundbite – but with more definition the idea of stimulating and encouraging innovative business, while tempering regressive cronyism and rent-seeking, could form the basis of a progressive business policy.
To do this, we need to lose some of the dogma. We need to stop applying 19th century principles to 21st century problems – society is no longer defined by oppressors and the oppressed. For sure, there are countless examples of worker exploitation in Britain today, but often this is down to poor management within individual organisations or the monopolistic effects of inefficient markets, rather than some inherent flaw with business itself. We should acknowledge that most of the positive advances in society today stem in large part from the profit motive – from the smartphones that have revolutionised communication to the medical advances that underpin our NHS, businesses have generated the innovation that improves lives.
Obviously, we on the left are also all too aware that many have been left behind by the globalisation of the world economy, and that for every creative burst of the new there must be painful destruction of the old. We should also never forget the important role the state plays in business development, from tax breaks and research grants, to provision of infrastructure without which the economy would simply not function. Capitalism, for all its benefits, certainly has its vices and victims. Labour must always strive to mitigate these effects, protecting the vulnerable without stifling the creative drive that feeds our economy. We must remember that in order to redistribute wealth you first have to create it, and that involves private enterprise and profits.
How can we define our own vision of what it means to be pro-business? Well, we could do a lot worse than shift some of the focus in language from ‘workers’ to ‘consumers’. By standing up for consumers, we represent the everyman, regardless of gender, income or race – everyone in society is a consumer. Emphasising consumer rights has the potential to achieve that mythical balance, it can keep businesses dynamic and improve efficiency, but also ensure that markets are fair, and avoid exploitative monopolies.
Second, we should be promoting a reduction in the barriers to starting and developing businesses, including the ability of companies to enter closed markets, such as energy and banking. This would not only move our economy away from the too-big-to-fail corporations that held the world to ransom in 2008, it would provide an appealing counternarrative to the Tories. Conservatives, as their name suggests, are about keeping the status quo, so while Tories represent monopolies and vested interests, Labour should stand for innovation and fair competition.
Finally, as technological advances consign many traditional occupations to history, we should develop policies that ensure people from all backgrounds are fully equipped to take their place in the modern economy. In their book The Second Machine Age, Erik Brynjolfsson and Andrew McAfee spell out the demands this will place on a future society. Some, such as French finance minister Emmanuel Macron, are already looking about how we can build socialist principles around this future.
We in Progress should be doing the same. Too often in the past Labour has been portrayed as a Luddite impediment to economic progress, insisting on propping up defunct sectors against inevitable job losses rather than fighting to ensure these people can be retrained to find a role in new enterprises. To do this, and equip the British people with the skills required to maximise their potential, we need to work collaboratively with businesses now to ensure they develop alongside our progressive values rather than against them.
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Mathewe Bennett is a member of Progress. He tweets @MatheweBennett
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I couldn’t agree more.
There are too many people in the Labour movement who fundamentally believe that there is something morally wrong with making a profit, that profit itself is evidence that either workers or consumers are being ripped off. Whereas profit should be fair reward for risk – with the crucial caveat, that is it made in a genuinely open and competitive market. This is something that does require a lot of interventionist government action (about which the Tories are perpetually in denial).
I’m a manager for a big company, and it’s constantly impressed on us that we will not get the best out of our workforce unless we have respect for people’s feelings and opinions, support them and reward them fairly. This completely in keeping with Labour’s values. We should be finding examples of businesses which implement the values we believe in AND are profitable and successful, and working with them to learn lessons to apply to businesses where this is not happening. Not just constantly berating them for ripping people off.
The last point about technological advance I think is crucial for Labour. I think this is the area which offers us most opportunity to differentiate ourselves – UKIP have chosen to pretend that globalisation will just go away if we whinge enough, the Tories are happy to leave people to fend for themselves. What businesses need most is a skilled, flexible workforce. What workers need most is to be skilled and flexible so that they can earn a decent wage and not end up on the scrapheap when times change.
All parties are rightly focused on improving schools and of course it’s essential that kids don’t come out of school lacking basic skills. But I think we also need to focus on what happens after school, we need to deal with the fact that most people are going to change career at least once in their lives, we need to offer support and opportunities for people to gain the skills they need throughout their working lives. This is the most important thing government can do to help business and coincidentally the important thing that government can do to help workers.
If it is growth and economic advancement that is our concern then surely producing a surplus for further investment should be our ambition and challenge. Elevating ‘profit’ as a desirable phenomena gives positive emphasis to the use to which it is put irrespective of its value to the economy. Income is surely the reward we receive for effort and risk. Profit is not of itself a valuable entity – it is the use to which the ‘profit’ is put that is of use to society. This distinction lies at the heart of the UK economic problems investment has been so, so neglected in favour of ‘easy money’ house mortgage bubble, i.e. the banks ‘printing’ money (as they do since it does not correspond to savings received) for profit for consumption and not for investment. This weakness in the elevation of profit is diverting societal resources for private consumption benefit. Whilst you or I may like it we benefit in this way, it is surely not a recommendation for the running of industry or society – there is nothing stopping us from being paid well as an income. But to divert societal resources for private consumption is not useful economics.
There’s a difference between what the aims of government and the aims of a business should be. My point is certainly not that government should be encouraging the pursuit of profit above everything else in the economy.
But the point of a business is indeed to make profit, and so long as that is done in a genuinely free and competitive market – where consumers are not being lied to or ripped off, or where workers are not being exploited – then there is absolutely nothing wrong with businesses pursuing profits. You say that “income” should be the reward for effort and risk, but for a business – that’s what profit is. Unlike employees, businesses don’t get a guaranteed monthly salary, unlike employees, business owners are liable for the debts if the company goes under. No one is going to take those risks without the chance of reward in the form of profit. And in a genuinely free and competitive market it’s actually impossible for a corporation to make excessive profits (they will be undercut by someone else).
Government’s role is then to provide the things that private industry can’t – public services, long-term investment in infrastructure, long-term investment in people, re-distributionist policies if necessary. Government and industry have different roles in an economy, but the idea that those roles are contradictory or incompatible is just wrong.
“it’s constantly impressed on us that we will not get the best out of our workforce unless we have respect for people’s feelings and opinions, support them and reward them fairly. This completely in keeping with Labour’s values.”
In the C21st with the rapid growth in the knowledge and service economies the Labour Party needs to build alliances with buisness groups where there is a shared common interest. Groups like the Coop Movement, Stoos Network, the Management Innovation eXchange, WorldBlu and Spark the Change, Groups who can demonstrate that maxmising an employee potential with pay and decsion making responsibilities can directly contribute to a company’s success. Take a look at Semco – one of Brazil’s more successful companies build upon the ideas of a workplace democracy and you have a window into what a new kind of relationship between business and social politics might look like.