Three candidates remain in the race to replace Jeremy Corbyn. What would their victories mean for Labour's economic policy?
One of the curious things about the Labour leadership contest is that many of the dividing lines in the ‘debate’ have been largely manufactured by the candidates – with each laying claim to territory that is actually shared between them (for instance, a commitment to decentralising power) – or amount to little more than vague rhetorical pitches (for instance, Starmer as the ‘electable’ candidate or Nandy as the ‘change’ candidate). Meanwhile, the real differences have been either little discussed or deliberately obscured.
None of the candidates have published a detailed manifesto. As a result, very little light has been shed on the agendas they would pursue if elected. It has been left to party members and commentators to read the tea leaves, poring over fragmentary statements made by the candidates and drawing conclusions based on their backgrounds and backers. This is easier to do in the case of Long-Bailey, who is drawing on a substantial base of policy work from the Corbyn era which is (mostly) in the public domain. Starmer and Nandy are much more unknown quantities.
Nowhere is this dynamic more obvious than on economic policy. As I wrote for the Guardian some weeks ago, beneath the sound and fury of the campaign, a consensus has been quietly emerging on what you might call ‘participatory socialism’: combining a renewed commitment to common ownership with an emphasis on democracy, localism and empowerment. All the candidates have signed We Own It’s ten pledges on public ownership, covering everything from ending the academies programme and reversing NHS privatisation to renationalising rail, mail, energy and water, as well as public broadband. All have talked about doing this in a way that is less top-down and more empowering for service users, workers and communities. And all have talked to varying degrees about decentralising and democratising the state (see here for a helpful comparison of their commitments from Adam Ramsay).
This matters: it testifies to the legacy of Corbynism in shifting the political centre of gravity. In 2015, nobody but Corbyn was really taking public ownership seriously (Andy Burnham made a belated commitment to “progressive renationalisation” of the railways after Corbyn’s campaign began to surge). Now, it is an accepted baseline for anyone hoping to win party members’ votes. But it would be a mistake to conclude from this that there are no substantive policy differences between the candidates. On the contrary, they often use the same broad terms to mean very different things. The language of ‘economic democracy’, increasingly used to describe this emerging agenda, has often contributed to this fuzziness rather than illuminating it.
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Democracy can mean different things depending on who is being represented (workers, consumers, citizens?), at what level (local, regional or national?) and in what context (do democratic institutions compete within existing markets, or does universal democratic provision replace the market?) The answers may depend on which area of the economy we are talking about; for instance, we might treat natural resources like water or basic human needs like housing differently from businesses producing non-essential goods and services. The emphasis of the new economic democracy on ‘pluralism’ – building a diverse ecosystem of differing forms of public and common ownership – leaves a lot of room for hidden disagreements about these questions. The lack of honest debate about these differences is a significant obstacle to Labour’s ongoing political and intellectual renewal.
Some of the differences are strategic and tactical. Long-Bailey and Nandy have coupled their talk of empowerment with an emphasis on rebuilding Labour’s roots as a political force in working class communities. Starmer’s campaign has instead focussed on professionalising the party’s operation at national level, winning credibility in the media and holding Johnson to account in parliament. These very different approaches to winning power have tended to be obscured by the false dividing line between Starmer as the pragmatic ‘electability’ candidate and Long-Bailey as the leftist ‘purity’ candidate. But there are also differences on matters of policy and ideology. As a recent article in New Socialist pointed out, headline pledges disguise divergent approaches to public ownership. Moreover, these are rooted in deeper differences of ideological perspective.
The key difference between Long-Bailey and Nandy is not between ‘top-down’ and ‘bottom-up’ politics – a common misrepresentation. But they do differ on the role of the state. Long-Bailey follows in a democratic socialist tradition which sees the state as necessary to transform the economy for the common good, but wants to reimagine this role in a more decentralised and democratic way. Nandy is closer to the soft left ‘Blue Labour’ tradition, which is ideologically communitarian, suspicious of the state, and more inclined to prioritise community-led solutions. Meanwhile, front runner Keir Starmer has been able to maintain his appeal among all wings of the party by carefully avoiding being drawn into specifics on these ideological divides. We still don’t really know where on the spectrum from statist to communitarian his politics lie.
In what follows, I try to tease apart these differences from the incomplete and often contradictory statements they have made during the campaign – and draw some conclusions about where Labour might go next.
Rebecca Long-Bailey: remaking the state, not replacing it
At her campaign launch in Manchester, Long-Bailey pledged to “bring democracy to the economy” and spoke of her commitment to “modern, democratic public ownership”. Assuming we can take her policy work in the Shadow Cabinet as a reliable guide, this means renationalising and insourcing key national infrastructure and services, then restructuring them in a more localised and democratically accountable way. These public networks then act to support co-operative and community-owned entities as part of a wider ecosystem.
So, for example, a policy paper commissioned by Long-Bailey (‘Bringing Energy Home’) proposed that the big six energy firms be renationalised, but energy transmission and distribution would then be decentralised. Public energy supply companies would source renewable energy generated by a mix of publicly and community-owned entities (for instance, large-scale public offshore wind and small-scale community-owned solar and onshore wind). The result is an ecosystem of democratically owned energy generation and supply, underpinned by the state and jump started by renationalisation to sweep away the power of private energy companies. As the New Socialist article points out, in this model, “nationalisation of the energy supply is not in opposition to the expansion of municipal and cooperative energy companies but, rather, a precondition of it”.
This reflects a deeper political and strategic orientation to the role of the state. Corbynites contend that we cannot do without the state, for a number of reasons. We need its ability to directly confront concentrations of corporate power in sectors like energy and banking, where the big players are so entrenched that they cannot feasibly be displaced by bottom-up competition on any reasonable timeframe. We need its ability to coordinate at scale – essential for infrastructure networks like energy and water, and critical for rapid action to decarbonise the economy. We need its ability to secure universal access to basic goods and services on equitable terms, which a patchwork of community solutions cannot do. And we need its ability to manage decentralisation in a way that reduces, rather than exacerbating, regional inequalities. For all these reasons, Bringing Energy Home concludes, “public ownership is required as a backstop to community control.”
But this does not mean Long-Bailey has an uncritical approach to state power. On the contrary, her campaign has repeatedly emphasised the need to “take power back from the gentleman’s club of Westminster” and “overhaul a broken political system” with a “constitutional revolution” to bring power closer to ordinary people. She has matched this with an internal commitment to policymaking “by our movement and from the bottom up”. Along with her mentor John McDonnell, she has been critical of the post-1945 model of public ownership which failed to give ordinary people a real stake or voice in nationalised entities, promising to reimagine it. The task for Long-Bailey, then, is not to replace the state but to remake it – more accountable, more participatory, more local.
Lisa Nandy: let a thousand flowers bloom?
By contrast, Lisa Nandy’s politics is much more instinctively suspicious of the central state itself. Early in the campaign, she said, “If I’m honest, I think nationalising the energy companies is a waste of money. Disrupting them by setting up municipal energy companies and energy co-ops around the country is a much better route.” In a BBC hustings, she followed up by arguing that “we cannot carry on going around as a party promising to nationalise everything… [when] we haven’t got a clue how we would do it”. In a recent article published after We Own It sought clarification of her position, Nandy argues that Labour must “think beyond top-down renationalisations and think more radically about democratisation. Collective ownership is in our DNA as a party. But collective ownership does not have to mean national ownership… Look at Preston, or Salford: places where new institutions, mutuals and co-operatives are being created so that local people and local workers can have a stake in their housing, their services and the infrastructure around them. These are not mere staging posts on the path to full nationalisation; they are exciting models of shared ownership that are important in themselves.”
In this narrative, municipal and community ownership are positioned as an alternative to taking private monopolies back into public ownership at national level, rather than as complementary. This entails two implicit claims, one intellectual, one strategic. The intellectual claim is that large-scale state intervention is inherently antithetical to genuine community control, and that we should be suspicious of it. If our ultimate goal is local empowerment, we must get there through locally-led initiatives. The logic of top-down state intervention will always end up concentrating power. (Note that this conflates the distinction between national and local ownership with the distinction between state and community ownership, which muddies the waters further.) The strategic claim is that such intervention is unrealistic, and that we can more easily shift the system through gradual displacement of existing private providers, without the need for top-down ‘big bang’ renationalisation led by the state.
And yet Nandy is not a pure communitarian. Her approach to the role of the state might be described either as nuanced or confused, depending on one’s perspective. It is sometimes difficult to tell what she really thinks, as her attempts to appeal to different wings of the party have led to mixed messages. She appears to favour renationalisation of the railways, and distinguishes this from sectors like energy and water only by saying it is more of a “priority”. She has variously described free broadband as a “good policy” for which the case needed to be made more carefully, and as an unrealistic policy that was not “relevant” to people’s lives. Beyond nationalisation, she criticised Labour’s pledge to abolish tuition fees as unaffordable – widely seen as an attempt to appeal to those on the party right who favour lower public spending – but elsewhere has suggested she would retain this policy but pay for it differently (or, elsewhere again, that she believes in it but would not prioritise it).
She has also signed a pledge to retain Labour’s 2019 policies on council house-building, which is predicated on public investment in public assets and on target-setting at national level. This suggests at the very least a difference of emphasis to her articles championing bottom-up models. Of course, the two are not mutually exclusive. But it is unclear what Nandy thinks the appropriate relationship between them should be. There is an analogy with energy here, too: just as we cannot expect to meet the chronic shortage of affordable homes simply by supporting community land trusts and waiting for them to fill the gap, so we cannot rapidly decarbonise our energy systems simply by supporting co-operative and municipal energy and waiting for their market share to grow. It is entirely possible that, pressed hard enough on policy detail, Nandy’s position on such matters would end up gravitating closer to Long-Bailey’s.
Keir Starmer: an enigma wrapped in a riddle
And so to the frontrunner. Starmer has left his approach to these questions deliberately ambiguous. Of all three candidates, his campaign has foregrounded ideas about economic democracy the least. What statements he has made have been very carefully worded. One of his ten pledges is that “public services should be in public hands, not making profits for private shareholders”, promising to “support common ownership of rail, mail, energy and water”. The use of the term “common ownership” leaves open the possibility of a Nandy-style sidestepping of renationalisation. Even when invited to clarify his position on democratic public ownership by Labour for a Green New Deal, Starmer’s answer was short and vague, essentially repeating the language of his pledge and declining to elaborate substantively.
The difficulty of pinning Starmer down is heightened by the fact that he does not situate ‘common ownership’ within a wider political-economic analysis or worldview, as the other two candidates do. He talks about “the moral case for socialism”, and insists he will maintain Labour’s “core principles” and “values”, such as opposing “the moral injustice of poverty, inequality and homelessness”. As Laura Kuenssberg has noted, this is about the ‘what’ and ‘why’ of politics: he is much vaguer about the ‘how’. Yet the ‘how’ is precisely where Labour’s key internal disagreements lie, and where the wider terrain of political contestation is moving as the pre-crash consensus breaks down. It cannot be avoided forever.
Starmer’s webpage on “a just society” foregrounds policies which skirt this terrain: for instance, replacing GDP with wellbeing, or early intervention in public services. It seems unlikely to be an accident that these policies do not speak to the question of where power lies in the economy and how a socialist government can shift it; why the economy is delivering bad outcomes and how a socialist government can change it. They do not mention key drivers of regional and generational inequality, such as our economy’s dependence on rising house prices and the City of London. They have been carefully chosen to unite Blairites and Corbynites, with neither finding much to disagree with.
The few indications we do have of Starmer’s take on these questions suggest that he is, as Steven Fielding has put it, the “continuity Miliband” candidate. His pledge on “economic justice” promises to increase income and corporation taxes and “clamp down on tax avoidance”. One of the central contentions of the Corbyn leadership was that it is not enough to correct unequal economic outcomes through the tax system: rather, we must restructure the economy to democratise wealth and power, so that it delivers more equal outcomes as a matter of course. Ed Miliband himself toyed with this idea when he talked about ‘predistribution’. It underpins the revival of interest in public ownership, as well as a wider policy agenda that encompasses Inclusive Ownership Funds, community wealth building and support for co-operatives. But it is strikingly absent when Starmer talks about the economy.
On the central question that divides Long-Bailey and Nandy – the role of the state – he has also been relatively silent. His website gives an extensive litany of the misery wreaked by austerity and deregulation – crumbling public services, precarious work, decaying high streets – but declines to draw the obvious conclusion that we need a bigger state (although elsewhere he has said that Corbyn was right to shift Labour to an anti-austerity position). Instead, he pivots to the emerging consensus ground of localism and empowerment: “This is why we need to devolve power, wealth and opportunity out of Westminster and into the hands of local communities.” In context, this seems a bizarre non-sequitur, coming after a list of ills caused not by over-centralisation but by the retreat of the state and of organised labour.
A few years ago, it would have seemed unthinkable that devolution would be considered safe ground for an aspiring Labour leader, but the role of the state itself would be untouchably contentious. But this seems to be where we are. What hints Starmer does give suggest something closer to Nandy’s position: he talks about “investing in community-led organisations”, “piloting models of service-user and community control”, and “encourag[ing] the creation of new co-operative platforms for the digital age”. Long-Bailey would not disagree with any of this – but the subtext is in what is not said. By choosing to foreground these ideas, Starmer is implicitly backgrounding state investment and public ownership. At time of writing, he is also the only candidate not to have signed the pledge on council house-building.
Shaping the context
Where Nandy has tied herself in knots trying to face both wings of the party, Starmer has done this far more successfully by simply saying nothing much at all. Given that he now seems almost certain to win, this vacuum where a political project should be is deeply worrying. It is as though the desire for unity has trumped the desire to have any clear idea of where the party wants to go or how it will get there. As Tom Blackburn has pointed out, Labour is a party whose disparate wings have “deep and fundamental differences … it is impossible to resolve the contradictions within it simply by instructing people to behave themselves.” As we have seen, Nandy and Long-Bailey come from very different starting points ideologically – and the soft left is far from the most right-wing element of Starmer’s own internal coalition.
It seems safe to conclude that, whatever his personal views, Starmer is not going to expend much political capital defending the radical economic agenda set forward by Corbyn. It also seems unarguable that he will face significant pressure to do the opposite – whether from the right of the party, the media, or industry lobbying – particularly where this agenda involves confronting concentrations of corporate power. On the other hand, there is little evidence that he is actively hostile to it. Much will therefore depend on the ability of the party’s left, and allied social movements, to make the political weather in which Starmer operates. To some extent, it is already doing this: thanks to We Own It, Starmer has made specific commitments on public ownership which he can now be held accountable for.
Corbyn supporters who suggest that a Starmer victory will completely reverse Corbyn’s legacy, or that “all hope of positive social transformation here will be dead” (David Graeber), therefore risk creating a self-fulfilling prophecy. The shape of the debate this time around is unrecognisable from the 2015 contest, when Andy Burnham argued that Labour needed to win back voters’ trust on immigration and the economy by tacking right on border control and admitting that it had let the deficit “get too high”. To suggest otherwise is to voluntarily erase the achievements of Corbynism in shifting the bounds of political possibility. It is also the fastest way for the left to marginalise itself, when it needs to be thinking strategically about how best to salvage and build on the agenda developed during the Corbyn years.
These voices understandably want to challenge those who think they can vote for Starmer safe in the belief that he will keep the core of Corbyn-era policy intact. They are quite right that he will face overwhelming pressure to water down this agenda. But if the movements for economic democracy want to salvage and build upon this platform, they must switch gears once the campaign is over. It will be up to them to maintain the pressure to put big, bold ideas at the heart of Labour’s agenda. Crucially, it will also be up to them to create the counter-power that can make these policies the politically necessary, even the ‘safe’ option, rather than the risky and radical shot in the dark.
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