On Saturday 23 June, John McDonnell joined Open Labour’s annual conference as keynote speaker. Here he discussed Labour’s mission to bring about a fundamental shift in wealth, power and ownership in Britain. Among the policies he outlined as key to this were fair taxation, investment in housing, and reforms to our financial system. He also emphasised our need for a host of structural changes to profoundly reshape our economy, including a strategic investment board, encouraging co-ops and profit sharing, and Community Wealth Building on the Preston model.

In light of John’s speech, we’re republishing this article by Joe Guinan and Martin O’Neill, a longer version of which appears as the editorial in the Summer 2018 issue of Renewal, which analyses how this vision and policy package could transform Britain on the scale of the transformations of Attlee or Thatcher.

Transformative Change

Largely unnoticed by its enemies within and without, the Corbyn Project is cohering around a programme for transformative change that could form the basis for a new political-economic settlement. This new economics, organised around ownership, control, democracy, and participation, offers the possibility of dismantling the neoliberal order. The ‘institutional turn’ in Labour’s thinking is a direct response to the magnitude of the challenges now confronting Britain – wage stagnation, underinvestment, low productivity, widening inequalities of income and wealth, and the looming effects of climate change. These problems have not simply arisen by accident, or as the result of poor policy choices, but are the predictable outcomes of the basic organisation of the economy. To address them, we need a different set of institutions and arrangements capable of producing sustainable, lasting, and more democratic outcomes – an economy ‘for the many not the few’.

When it comes to economic fundamentals, there has been a decades-long deficit of new thinking on the left. Where they have not capitulated totally to neoliberalism, most social democrats have been splashing around far downstream from where the real action is, seeking a way forward through redistributive policies. But given that returns to capital are increasing at the expense of labour’s share, it’s only natural that we should be looking at broadening and democratising ownership. A truly impactful alternative left strategy must go after capital itself.

Economic Democracy

But this does not mean a return to the postwar model of public ownership, either: McDonnell has spoken of the limitations of large, top-down, centralised public corporations, which ‘centralised too much power in a few hands in Whitehall’. Rather the new economics draws on old (and largely neglected) socialist debates about economic democracy. The central idea is the notion of extending principles of popular sovereignty from the realm of politics and governance into economics. As McDonnell has put it, ‘Democracy and decentralisation are the watchwords of our socialism’.

In Britain economic democracy has a long and impressive lineage; the modern cooperative movement, which boasts a billion members worldwide, can be traced back to the Rochdale Pioneers. Real-world examples of democratic, participatory economic alternatives exist across the globe. Worker ownership, cooperatives, municipal enterprise, land trusts, public banks, and a host of kindred institutional forms all represent ways in which capital can be held in common by small and large publics. They embody alternative design principles, relying not on regulatory fixes or ‘after-the-fact’ redistribution but on fundamental structural changes in the economy and the nature of ownership and control over productive wealth.

Widely described as a (merely) social democratic programme, For the Many Not the Few in fact contains the seeds of a radical transformation beyond social democracy, and towards economic democracy. Policies such as taking the major utilities, railways, and postal service back into public hands, establishing a national investment fund to help ‘rebuild communities ripped apart by globalisation’, linking public sector procurement to a regionally balanced industrial strategy, creating a national investment bank and a network of new regional public banks in support of small and medium-sized enterprises, and democratising ownership by supporting co-ops and worker-owned firms, all represent a break with neoliberalism. In combination with a commitment to devolving and decentralising power and decision-making to local communities, and forming a Constitutional Convention that ‘will look at extending democracy locally, regionally and nationally, considering the option of a more federalised country’, a very different pattern of political economy begins to appear.

For the Many Not the Few calls for a ‘right to own’, which would give workers the right of first refusal when their companies are up for sale (particularly important given the coming ‘silver tsunami’ of retiring baby boomer business owners, and the succession question this raises). Alternative Models of Ownership takes this further, urging local public authorities to actively support and fund the incubation and expansion of worker co-ops and other social enterprises as part of their local economic development strategies – as is now happening in cities across the United States, as well as closer to home with the celebrated ‘Preston Model’ of community wealth building.

An important institutional base

A large worker-owned and cooperative sector could form an important institutional base for a new place-based economics and politics in Britain, one that is capable of overturning simplistic notions of ‘pro- or anti-business’ and replacing them with new alignments around embedded democratic local and regional economies in opposition to footloose, extractive multinational corporations. In a political landscape fractured and divided by Brexit, decentralised public control of the economy could reconstitute the basis for democratic participation by giving people real decision-making power over the forces that affect their lives – a chance to actually ‘take back control’. Meanwhile, débâcles over outsourcing to Capita and Carillion, together with the long shadow cast by the Grenfell Tower fire disaster, underscore the importance of replacing an increasingly moribund neoliberal service delivery model. Corbynism seeks to displace such financialised economic forms with democratic alternatives of real benefit to ordinary people. This can begin right away, wherever the Party is in power at the local level – and a Community Wealth Building Unit has recently been set up in Corbyn’s office to further this agenda.

At the same time, Labour is promising to help reconstitute the social basis for popular power through a long-overdue repeal of the Thatcher restrictions on trade union activity. The Party has already adopted the Institute of Employment Rights’ Manifesto for Labour Law, a suite of policies that would completely change the context in which Britain’s trade unions operate, introducing a Ministry of Labour to represent the interests of workers in government, promoting sector-level collective bargaining, and creating a system of Labour Courts with specialist judges and a new legal entitlement to engage in secondary strike action.

Radical reform

Taken as a whole, the essence of Labour’s ‘institutional turn’ is to bring about an egalitarian rebalancing of power through a reordering of the basic institutions of the economy. ‘I want us to surpass even the Attlee government for radical reform’, John McDonnell has said. The historical comparison is apt. Twice in the course of the last century, radical reforming British governments transformed Britain’s political economy on the basis of significant changes in ownership.

The nationalisations of the 1945-51 Labour governments brought the Bank of England, coal, steel, civil aviation, the railways, and all the major utilities (electricity, water, and gas) into public hands. By 1951, Britain had a public sector workforce of four million, eighteen per cent of the total, while a fifth of the economy was in public ownership. For all its shortcomings, this remains today the most radical and far-reaching economic reform programme ever implemented in Britain.

The Conservative governments of Margaret Thatcher and John Major substantially reversed this transformation. Between 1980 and 1996 Britain racked up forty per cent of the total value of all assets privatised across the OECD, a massive transfer of wealth from public to private interests. Privatisation not only allowed for attacks on the trade unions and a restoration of capital’s ‘right to manage’ but was also instrumental in the build-out of London-based capital markets. The £3.9 billion rollout of shares in BT in 1984 was six times larger than any previous stock offering. In this way privatisations helped secure the ascendancy of finance capital and the City. The ‘Right to Buy’ policy, by which local authorities were forced to sell council housing to any sitting tenant able to purchase their homes, at discounts of up to fifty per cent, was by far the biggest privatisation, explicitly targeting swing voters to create a mass constituency for the new politics. As Thatcher famously said, ‘Economics are the method; the object is to change the heart and soul’.

Labour’s institutional turn now holds out the promise of a third landmark phase-change in the country’s economic development. All around the world, parties of the left and centre left are adrift or in crisis and decline, unsure of their intellectual orientation, or split. The UK is a promising exception; Corbyn’s Labour, as a radical democratic socialist government-in-waiting, represents a historic opportunity for the creation of a new economic model – one that, if successful, could be emulated far beyond our borders. The Corbyn Project thus merits support across the left, from people of diverse ideological persuasions, as quite simply the best available chance to advance economic solutions commensurate with the scale of our problems. The task is now to put flesh on the bones of this transformative agenda in the face of the deep structural challenges of a fluid and rapidly changing UK political and economic landscape, and to put it into effect – thereby creating an economy that works ‘for the many not the few’.

Joe Guinan is Executive Director of the Next System Project at The Democracy Collaborative, and is a Commissioning Editor for Renewal.

Martin O’Neill teaches at the University of York, and is a Commissioning Editor for Renewal.