Keir Starmer’s arrival as leader of the Labour Party will, of course, shift many of the political co-ordinates. Labour’s institutional setting will look different under a new leadership. But the case Labour has staked out in the last four years – opposing austerity, raising taxes on the richest, supporting a far wider role for the state in the economy – now, under conditions of exceptional crisis, looks like a prescient vision of economic common sense. The Financial Times, in an extraordinary leader, has suggested that “Radical reforms — reversing the prevailing policy direction of the last four decades — will need to be put on the table. Governments will have to accept a more active role in the economy.” It would, perhaps, have been nice to have the same realisation dawn at some point before 12 December 2019, but the world has changed radically and, most likely, irreversibly since that date. The biggest mistake the left could now make is to not realise this. The second biggest would be to assume that the world changing means that it does not also need to.

It is true that those dancing merry jigs on Jeremy’s political grave are doing so prematurely. As the LabourList survey indicated, the preferences and the motivations of Labour Party members are far closer to Jeremy Corbyn than to some presumed “centrism” and, with a Tory Chancellor (and Goldman Sachs alumnus) now making the biggest government interventions in British peacetime history, political realities are far closer to Jeremy Corbyn than to, say, 1997. All the candidates that stood for leader stood on a platform defending the central parts of Jeremy Corbyn’s economic programme. 

But the arguments that were won (genuinely) in the preceding four years are not the same as the ones we will need in the future. Corbynism itself was always an amalgam of different tendencies and forces: one element was a decidedly social democratic and state-centred view of the economy: of reversing the great privatisations of the 1980s and expanding centralised provision. This was Corbynism “in” the state. But it also contained a countervailing pull: a Corbynism “against” the state. This was the tradition of the decentralisers: of worker and community ownership, of devolution of powers and local organisation. It was the tradition of thinkers and economists like James Meade, or Elinor Ostrom, or G.D.H. Cole – all now due for an intellectual revival. It was the tradition of self-organisation and common ownership outside of the state, where those who create the value in society also hold a stake in it, whether through a worker-owned firm or a community-owned solar scheme.

John McDonnell was wont to say we should do both: “in and against the state”. This sounded neat, but did not quite resolve the dilemma over which part of that should achieve priority: fundamentally, you would end up doing more of one or the other. 2017’s policy document, Alternative Models of Ownership, still attempted to balance the two, but the question was answered in practice by the 2019 manifesto, which was strikingly state-centred, proposing renationalisations beyond the 2017 list and what, at the time, looked like a significant boost to public spending – taking Britain to the sorts of levels of public spending more typical of Northern Europe. The decentralising elements of Corbynism were downplayed, or bent in a centralising and state-centric direction, as with the very low cap on the Inclusive Ownership Fund, which would see the state take dividends from worker-owned shares above £500. The initial impetus of the Corbyn movement – to oppose austerity – had expanded into a comprehensive programme for the expansion of government. “Socialism from above” had taken priority over “socialism from below”.

Opposing austerity

It was (and is) essential to oppose austerity, considered as both the winding down of funding for critical parts of public provision – the benefits system and social care are, today, amongst the most glaringly obvious, as is the £872m taken from public health spending – and as the hollowing out of state functions: the NHS and Public Health England today are suffering directly as a result of aiming for supposedly “efficient” delivery via privatisation and the creeping forms of the internal market. It was, and is, essential to oppose neoliberalism, considered as an economic policy prioritising the logic of competition and the hollowing out of the state and social protections more generally. 

Critically, however, this opposition cannot only be about demanding public ownership. Simply extending state control would not necessarily undo the damage of neoliberalism: the experience of the part-nationalised banks, after 2008, should make this clear. The problem was identified in the various proposals made under Jeremy’s leadership for the renationalisation of public utilities, all of which – it was promised – would be brought back into public control under some form of democratic oversight. It was never quite clear that the public were crying out for part-elected Regional Water Authorities, or that the policy should have been given quite the priority it was, but at least it was trying to move in the right direction: a recognition that the problems of the old corporate system were real, and needed addressing, from capture by insider interests to a low-level politicisation of decision-making. There are few specific reasons to expect a large, complex, hierarchically-organised but state-owned company to behave better than a large, complex, hierarchically-organised company in private hands.  How both are governed matters more. 

This is key to understanding the importance of even limited degrees of worker ownership of firms: if the process of work involves potentially conflicting claims over the outcomes of that work – from how any revenues are divided, to investment decisions, to the management of work itself – worker ownership provides a set of legal claims for employees independent of both the shareholders and government. Trade unions, of course, are the historic vehicle by which conflicts are mediated and bargaining takes place; the challenge in Britain today is, first, that rebuilding the unions is necessary, but it will be a long struggle; and, second, union membership and recognition alone does guarantee the sorts shifts in economic decision-making we want to see. The evidence is clear that companies with even relatively limited worker ownership schemes behave differently, and generally  focus more towards social and longer-term goals than those without. Introducing a third form of ownership for companies matters, because it reshapes the balance of interests around how production and work is organised.

All of this starts to open up a series of questions about the role and purpose of companies that Labour’s 2017 and 2019 manifestos implied, but never directly addressed – for all the solid proposals on corporate governance. This was missing a trick: Corbynism never quite developed a convincing story around what it thought of businesses, although enough was in the economic programme to do so. But for that to happen would have needed a reassertion of the decentralising and non-state focused elements of the programme: providing an account of why Labour thought some forms of business organisation and ownership were good, or at least better than others, and making less of an assumption that state ownership trumped everything.

State and capital

In response to forty years of neoliberalism stressing the superiority of private ownership and markets, it is understandable to want to reassert the value of the public, as expressed by state ownership, and to place public ownership at the centre of an economic programme. But covid-19 is likely to accelerate tendencies that make this less sustainable as a policy position for socialists. The dynamic across the globe, since the 2008-9 crash, has been towards a greater state involvement in economic life. China, now the world’s second-largest economy, is an easy and obvious case in point, as are other East Asian economies. But the push towards intervention and forms of state ownership was becoming more apparent across the world in the wake of the crash, starting with banking and financial systems but increasingly reaching into more traditional forms of industrial strategy. The various national strategies for Artificial Intelligence, often of immense size, the brewing arguments over technological sovereignty, and the (related) disputes over trade between the US, China and the EU are all amongst the indicators of a greater assertiveness by states in economic matters. 

I highlight AI as particularly indicative since both in terms of the scale of the investments being made and the likely direction of how that technology will be used: increasingly intensive collection, storage, and processing of data, with 5G as the glue holding it together. But this imposes more complex questions than can be resolved by fixating only on the state. Take current moves by NHSX to develop a contact-tracking app, as applied with notable success in South Korea. This is easily justified by reference to the medical emergency: testing and contact-tracking are critical to restoring some normality to daily life. But to impose this level of surveillance on a population also imposes serious questions about the rights they hold – both to basic privacy, and to the data they are generating. At present, those questions are answered too often by default – Big Tech creates facts on the ground, and then regulators and governments run to catch up. This process is likely to become increasingly short-circuited: Big Tech will work hand in (disposable) glove with the state to create facts, rewriting the rules for acceptability along the way. This is already underway: it is a matter of some significance that Dominic Cummings chaired at least one No.10 meeting with data companies on dealing with covid-19 over a month ago. 

It looks, at the time of writing, like  the covid-19 pandemic will accelerate the tendency towards both a larger state, and the tendency towards a far closer state-capital relationship. This will be a world where the primary economic questions start to look less about delivering growth as such – and there are decent reasons for thinking growth will be permanently lower, post-covid, after a short “recovery” period – or about the distribution of material output, but more about claims of rights and of transparency in the operation of the economy, and its relationship to the state. Economic questions would become far more politicised – since more will directly involve the state – and likely to focus more on issues of identity and recognition than only on distribution. We have already seen a version of this emerge in the last few years, in arguments over Brexit.

Under these circumstances, Labour will need to reshape its economic programme – and, to a large extent, how it thinks about economic questions. But if, looking ahead, the drive is no longer so directly towards a whittling away of the state, but of using the state in conjunction with private capital, then the argument cannot only be to insist on greater funding. Nor can it be to insist on public ownership. The primary economic issues can no longer only be thought of as about the distribution of goods, or about making the state do more than it currently is: although redistribution matters, and public provision has to be expanded, this should be a starting point for the programme, not a goal in itself. The economic programme has to also build in a focus on rights and of values: identifying not only the distribution of products as the focus of the economy, but taking a close interest in how they are made and how they are produced. For the data economy, we will need new forms of ownership and control over the wealth that data contains: simply handing it over to government may not be enough, but nor would handing it over to some private sector concern. The appearance of “data trusts” and of platform co-operatives start to indicate two ways in which this might happen.

Economic policy after Corbyn

This shift will require intellectual work. Corbynism put the economy at the centre of what it said about the world, but it ended up with a very specific vision of what the economy is, or could be. By the time of the 2019 election, it had shifted from the potential in Alternative Models of Ownership (AMOO) document, of seeing the economy not only as a machine for churning out goods, but as a set of social relationships that could be organised differently – and better. AMOO proposed a range of different ways in which society’s productive wealth could be owned, from public ownership to forms of co-operatives and common ownership, backed up by evidence from Britain and across the world as to how these forms of ownership might work. It was, and is, a critical intervention in mapping out what a good society and economy might look like and at its heart is a belief that the social relationships that form an economy are the most important element in understanding how an economy works, and in making it work better. 

Importantly, those social relationships that form an economy did not all need to be mediated by the presence of the state. There was no reason, if we are thinking about creating a better and fairer society, that a state like Britain’s should play a particularly large role in doing so: that we need a state as a backstop and a support should, in the teeth of this pandemic, be so obvious as to not need saying; that we need redistribution as an ex post correction to unfair outcomes should, by this point, also be obvious. But, looking ahead, the arguments we will be confronted with, after covid-19, are as least as likely to be around opposing extensions of the state’s powers as they are about extending its reach. If we end up with a view that a bigger state is necessarily a better state, we risk being disarmed. If we allow the arguments that have informed the left for the last decade, and arguably for the last four decades, to overdetermine the arguments to come, we will fall short. 

The shift in economic policy under Corbyn has been usefully labelled, by Joe Guinan and Martin O’Neill, as Labour’s “Institutional Turn”: an attempt to think through how the institutions of the modern economy can be rebuilt to become fairer, more democratic, and less damaging to the environment. It was a deliberate move away from the focus solely on state-centred redistribution – necessary as it is – that is the standard fare of social democratic economic programmes, and into trying to change and restructure the fundamental features of the economy. It produced a significant amount of high-quality work and has provoked an intellectual flourishing on the left, including new thinktanks like Common Wealth and Autonomy. But it is perhaps time to think about expanding Labour’s intellectual terms of reference: if the times ahead require us to think more carefully about claims of rights and access over resources, including digital resources, and about legal structures and forms that can embed democracy and provide meaningful relationships, then the work of law and political economy scholars is worth considering. We should get more deeply into the “code” of how corporations function, to borrow Katharina Pistor’s analogy, and provide a richer account of how law and legal forms can be used to deliver socialist outcomes. Perhaps appropriately, we would be moving from the “Institutional Turn” to the “Legal Turn”: a closer focus on rights, democracy, and decentralisation.

The future

There is no route to winning the next election that does not involve winning the political arguments that we have today and in the future, rather than trying to refight the battles of the 1980s and 1990s. Or, for that, matter, the battles of December 2019: the last six weeks or so have rendered many of the issues in that conflict irrelevant. (Who, now, will seriously try to claim that universal broadband access is anything other than an essential? We should be confident about making this point.) There will, no doubt, be attempts to unwind the expansion in state provision over the last few weeks once the immediate crisis is deemed to have passed. Already, the arguments are being lined up to support a rollback, once the immediate crisis is over; and the sooner a return to work can be enacted, the louder those voices will be. But there are two reasons to suppose that this will be at least a harder fight for the remaining neoliberals than it was in 2010: first, because we are living through a spectacular demonstration of the value of well-funded, functioning public services that will raise the political cost of a rollback – certainly on the NHS, but now also on welfare – very much higher than previously. Second, because the sheer size of the debt being taken on by government, pushing (as seems likely) well past 100% of GDP, that it is hard to make a plausible case for austerity as means to reduce them. Government is, post-covid, likely to be both larger as a share of the economy, and more interventionist within the economy. 

We must defend, as a minimum, the gains that have been made and oppose further austerity. But this should be considered a starting point: Labour’s vision of the future should be more expansive, and closer in tune to what we might already see appearing, dimly, as a post-covid future. A version of socialism from below can fit the uncertain times ahead because a society and an economy with widely-spread, common ownership is one that is more resilient to shocks and uncertainty: worker-owned firms are more likely to retain their employees in a recession; smaller, community-owned banks will not become too big to fail and are more likely to fund local small businesses; and community-owned renewable generation can help secure regular incomes in hard-to-reach communities. It is a vision that can begin to be implemented today, before the general election, as pathbreaking Labour councils like Preston are demonstrating, putting in place the measures needed to support community ownership and local businesses. And it is a vision that can secure the rights and freedoms of people and their communities against their steady erosion. For Labour to be in a position to win the next election, it has to build out a new economic story of real ownership, decentralisation, and resilience; of securing rights and extending democracy.

James Meadway is a former advisor to the previous Shadow Chancellor John McDonnell. He was also chief economist at the New Economics Foundation and is writing a book on an economy for the many.