Live Well for Less*
We are used to Ed Miliband’s post-neo-liberal mumbo-jumbo on the economy. We heard more of it in his speech to Progress on Saturday (see below). What was surprising, reading David Sainsbury’s book, Progressive Capitalism, is that he too criticises the New Labour government, in which he too was a minister, because it failed to “question fundamentally the neo-liberal political economy which had dominated the economic policies of governments in the Western world for the last 35 years”.
Lord Sainsbury is no naive-left Compassite. He supported David Miliband for the leadership and describes the brother as “average” in an interview in The Times today.
But he has joined the daydreamers of the easy alternative (like Nigel Lawson, conveniently after leaving office). Fortunately, he gives the reasons for his change of mind in his Preface, which allows us to assess the argument. The first reason for Lord Sainsbury’s change of mind is that he wrote a report on science and technology policy for Gordon Brown which was ignored:
Most politicians and Treasury civil servants seemed unable to take on board the basic message of the report, and this was due to their adherence to neo-liberal ideas.
The second reason was:
Having to fight off a private equity takeover bid for the family business during the summer of 2007.
This sounds as if we are getting to the heart of the matter. So, what was the problem? It was that the bidders made
not the slightest pretence of seeking to improve the performance of the company … The only change they proposed to make was to sell off all the properties of the company and replace them with massive debts. Then they would put the company back on the market, stressing the high return on equity but not the high risks involved, and walk away with £1bn of profit.
This I find baffling, and not only because of the generation of £1bn out of thin air. Lord Sainsbury decides that capitalism has to be reinvented because he didn’t like a takeover bid? A takeover bid which failed, moreover. But he says that it failed only because “members of the founding family refused to accept it”, and “the fact that the bid had been made reinforced my view that financial markets were becoming increasingly dysfunctional”.
As a Blairite who hasn’t had to fend off a bid for my family firm, I am sceptical, but I was keen to find out more about this dysfunctionality of financial markets and –rather more pressingly – what Lord Sainsbury thinks should be done about it. So I read on.
Sadly, the prescription is drearily familiar. Indeed, lo!, it is Ed Miliband’s policy of making takeovers more difficult (“I would not want to stop them entirely,” says Lord Sainsbury). First, Lord Sainsbury says, we should require those owners with more than a simple majority of shares to approve takeovers (it was Labour policy, in the 2010 manifesto written by Ed Miliband, to require a two-thirds majority). Secondly, we should “restrict voting in the target company to those who have held shares for more than a certain number of years”. Even if long-termism is a good idea, about which I have my doubts, legislating for it is a bad one.
And the third reason Lord Sainsbury has decided that neo-Labourism was a Bad Thing was the crash of 2008. It must be said to him, and to all points further to the so-called left, that the credit crunch was not a crisis of capitalism, it was a self-correction of capitalism.
It is alarming that both Ed Miliband and Lord Sainsbury want to replace “the kind of capitalism we have seen for the last 30-odd years [which] has simply stopped delivering for the vast majority of working people in this country” (Miliband) or the dominant “neo-liberal political economy” for the last 35 years (Sainsbury). And it is possibly a blessing that the happy clapitalism with which they want to replace it is so ineffective, bureaucratic and trivial. But it is no way to restore Labour’s economic credibility.
*”Live Well for Less” is the Sainsbury’s slogan: it might be Labour’s, as Ed Miliband has adopted Lord Sainsbury’s economic policy. Meanwhile there was a heated debate in the office about Ed Miliband’s Progress speech on Saturday: was it one of the Top 10 worst speeches this year, or was it just “averagely” poor? Judge for yourself: here are the economic sections:
Tagged in: book review, economics, labour party
There was an old way of running the economy that saw financial services as the bedrock of our prosperity …
The first of those old certainties was shot to its core by the financial crash in 2008.
But it had been crumbling before then.
The reason I take a different view of our economy from the past is simple: it is clear now this economy is not working for most working people.
And the answer can’t be to go back to the world before the crash …
One Nation is not just the country we would like to be.
It is the only way we can succeed as an economy in the future.
It is based on this idea: wealth creation does not come simply from a few at the top.
All the lessons of our history, from the industrial revolution to the post-war reconstruction, are that we need a recovery made by the many …
we are setting out how we do that.
Different from this government.
And different from the last Labour government too.
Training and apprenticeships for the forgotten 50 per cent of our young people, not just qualifications for those who go to university.
A banking system that serves the real economy, in particular small business, not businesses serving our banks.
An industrial policy based on long-term, durable wealth creation and innovation, not on the short-term, fast-buck.
Homes, schools, transport that we invest in, as the best route to growth, to create jobs and to enable people to play their part.
And understanding that we cannot have a recovery made by the many when living standards are falling year on year on year.
Latest from Independent journalists on Twitter