Speaking at yesterday’s Policy Network conference, The Quest for Growth, hosted by the London Stock Exchange, Miliband emphasised some important changes in the landscape of political economy. Despite Miliband’s insistence, this is a party still plagued by caution, acting as if it will get back into power as long as it does nothing to frighten voters. But a serious Opposition must itself develop prescriptions that meet the scale of the crisis. How did he fare in this respect?

Labour’s new buzzword, “predistribution”, was given a more thorough airing and its meaning I will return to. But there were some important moments early in his speech on the economic fundamentals of neo-classical orthodoxy. He cited three assumptions: low inflation secures stability, a ‘rising tide lifts all boats’ and the rules governing our economy are fixed. For the last 30 years these have been foundational maxims of British governance. “All of them”, he said, “have been discredited”.

Yet this is not a view shared by George Osborne whose economic toolkit is rooted in a firmly pre-2008 world, and it is in the recognition of neoliberalism’s demise – intellectually at least – that Miliband has begun to mark his territory:

"Just as the postwar consensus could not solve the problems of the late 1970s, so the ideas of the last three decades will not solve the central economic challenges we face. Instead we need a new agenda."

The fleshing out of a ‘new agenda’, however, is where Labour remains unconvincing; the step from recognising problems to delivering solutions. What should be made of Labour’s ‘Predistribution’ approach? It recognises it was a failure of New Labour to think that inequality can be entirely redressed retrospectively; predistribution is about building a high wage, high skill economy that requires less intervention on incomes from the state. Fairness must be built into the economy at ground level rather than being levered in by the state retrospectively.

"Centre-left governments of the past tried to make work pay better by spending more on transfer payments. Centre-left governments of the future will have to also make work pay better by making work itself pay."

It says a lot that this banal aspiration has to be regarded as significant progress. But it is welcome, despite the wonkish terminology. Seen alongside his speech on immigration and globalisation, Miliband is at least starting to understand the realities of the Blair-Brown model, as well as the central role of inequality in the global crisis: “we are going to build growth based not just on credit, but on real demand”. The flexible, unequal, low wage, low skill, credit-fuelled asset-churn approach of New Labour is not just unstable but unworkable; the assault on wages necessarily translates into demand problems, requiring credit booms to cover the gap. This then leads to increasingly high levels of transfer payments, an aspect of our low wage, globalised economy that has caused major strains on the post-war welfare model and a source of growing social tension.

In Dani Rodrik’s “The Globalisation Paradox” the redistributional problem of globalisation is set out in some depth. Global trade, based on comparative advantage, generally moves production to where labour costs are lowest, putting downward pressure on consumer demand (not to mention working conditions). To return briefly to neoclassical methodology, where every agent is deemed identical in spending habits regardless of income, this is a non-problem. But in actually existing capitalism this has been a fundamental flaw highly germane to our present crisis.

"…income redistribution is the other side of the gains from trade… some groups will necessarily suffer long term losses in income" (Rodrik, 2011)

Demand, thankfully, warranted much discussion at the LSE yesterday and Miliband was on sure footing when he cited it as the critical problem facing the UK today: “demand matters”. The Coalition’s brazenly ideological supply side assault is almost entirely worthless – from a growth perspective – but in its attack on employee rights and planning restrictions it will be positively harmful. ‘All pain no gain’ describes their current approach and looks set to become their lasting epitaph.

In his denunciation of ‘collective austerity’ he echoed Larry Summer’s lively speech from earlier in the day, though with not quite the same verve. Summers, who served as Treasury Secretary under Bill Clinton, issued a plea for the lessons of the 30s to be relearnt in a withering attack on Osborne’s economic record. Keynes’ rejection of Says Law was ‘exactly right’, he argued, supply will not create its own demand and with real interest rates at, or near, zero, “the government has the capacity to spend and invest in ways that may well pay for themselves”.

Returning to Miliband, his speech was not without problems and omissions, particularly in the Q&A session. He was weak on climate change and the green industries - which in a conference on growth was surprising. Even when the railways were mentioned the only message was “ensuring competition”, putting under further doubt Labour’s ability to view any sector of the UK economy – health and rail in particular - in anything other than pre-2008, marketised terms. Reforms of corporate governance, now a fundamental requirement for Britain’s economy, will apparently,  under Labour, be “led by business”: a byword for guaranteed inaction. On tax havens, many of which being British owned, Ed Balls would only suggest “vigilance” whereas both the country and the world needs action, and it would be popular too. There was not a word on quantitative easing and how the funds created by the Bank of England might better be deployed, and the key issue of debt write-offs – on which any recovery will ultimately depend – merited no mention. On moving towards a more co-operative, economically democratic model there was, again, nothing.

Despite all this Miliband struck many of the right notes. He could well be building a basis for a far more interventionist approach, on takeovers and industrial policy, combating short termism, with a British investment bank and financial reform. As ever, the key test will be the delivery; bold words in Opposition are ten a penny. But his diagnosis of the British economy continues to grow sharper and more coherent, and often with surprising subtlety – even if his proposed solutions remain lacking in ambition and constrained by internal party dynamics. Perhaps the real gamble is Labour’s conservatism – with voters grimly aware that some measure of radicalism is needed, there is a danger they will seek its rightwing manifestations if no left wing alternative is offered.