Political economy and Labour's factionalism.

Much has been written in these pages about the 'institutional turn' in Labour's political economy--a growing interest in looking beyond well-worn debates about fiscal and monetary policy, and towards the structure of the economy. The heart of this agenda is a commitment to democratising and decentralising ownership and power through a plurality of institutional forms and strategies. (1) The question of what will happen to this agenda post-COVID and post-Corbyn is a matter of debate. In a recent article for Political Quarterly, I argued that there is a perhaps surprising degree of consensus around some of these ideas within the Labour Party itself--but that its factional politics stands in the way of this consensus being acknowledged or cemented. (2) In this piece, I want to explore those dynamics further.

To say that the potential for a new consensus exists is not to underplay the real and significant ideological differences that exist between the party's right and left. Indeed, as Jeremy Gilbert has suggested, it is only the UK's electoral system that forces such different political characters as Peter Mandelson and John McDonnell into the same party. (3) The point is that the bitter factional hatred engendered by these differences is often not mirrored by the actual extent of the various factions' policy disagreements. Indeed, those disagreements have sometimes been magnified out of all proportion precisely to justify inter-factional rivalries that have little to do with policy. In fact, the widely differing ideological starting points that coexist uneasily within the Labour Party can sometimes converge on strikingly similar policy conclusions.

On the one hand, many even on Labour's right are ultimately social democrats at heart rather than neoliberal technocrats; and all but the most die-hard can see that attempting to revive the 1990s is a doomed political and economic strategy (though the aftermath of the local elections suggests that the die-hards may still wield outsize influence). Most social democrats are in the market for new ideas. On the other hand, Corbyn's Labour was, in reality, much more pragmatic than the common caricature of a gang of ideological purists unconcerned with electability. Accordingly, its policy agenda--certainly in 2017, and to an extent in 2019 as well--would have brought the UK into the mainstream of European social democracy (at least economically), and certainly would not have transformed it into the socialist heaven or hell that looms large in the political imaginary.

The resulting scope for policy convergence is perhaps best illustrated by the idea of 'community wealth building'. Pioneered in Preston, this is a concept favoured by the radical left as part of a long-term strategy to democratise capital through new models of local collective ownership, and to replace extractive corporate models with local recirculation of wealth. But much of its practical implementation to date has focused on such uncontroversial things as localising procurement spend to support (privately owned) small businesses, or promoting the Real Living Wage. In a recent speech on high streets, Anneliese Dodds did not mention Preston or community wealth building--perhaps in a sign that the fallout from the Corbyn years has toxified the language of the 'Preston Model' among the Labour front bench. But she did praise Manchester City Council for 'put[ting] social value at the heart of its public procurement' and 'increasing] the proportion of money spent locally'-which is precisely what Preston has been lauded for doing (although as part of a very different wider development strategy). (4)

Of course, as critics point out--and as its advocates are well aware--localising procurement spend is hardly enough to transform our political economy. Community wealth building in this guise was developed partly as a strategy for Labour councils to navigate the constraints of austerity--but its proponents aspire to much more than this. In Preston itself, where the logic behind a more radical approach has been pushed furthest, this includes plans around co-operative development, community banking and municipal energy. But even these ideas have been endorsed by figures such as Jonathan Reynolds, Rachel Reeves and Lisa Nandy, perhaps unsurprisingly, since such proposals are the antithesis of the bureaucratic statism feared by many opponents of the Labour left. (5) Patrick Diamond has suggested that Labour's approach to the economy in the 2017 manifesto was 'a broadly "stakeholder" view'. (6)

There are different ways of viewing these strange convergences. On the one hand, some would regard them as superficial and even dangerous. The fear on the left is that support for co-operative and community ownership will be used to give an illusion of radicalism--stripped of its context as part of a wider strategy for expanding the public realm (including through greater local and national public ownership and investment), and thus of its transformative potential. (7) The fate of David Cameron's 'Big Society' offers a salutary warning against any such agenda. On the other hand, some see the growing support for similar ideas among such disparate political voices as cause for hope: the sign of an emerging paradigm shift and the potential seeds of a new post-neoliberal consensus.

Of course, such shifts are always much bigger than any one political party. The ecosystem of new thinking and organising that has flourished on the UK left in recent years will continue to seed their ideas and practices in new places. And the unpredictable economic and cultural repercussions of the pandemic will also shape...