Ed Miliband says that voters should judge him not by his personality but by his ideas. If so, Labour is doomed, because Miliband has not made a single economic pronouncement that deserves to be called an “idea.” Although time is running out, he still has a chance to establish economic credibility by launching an intellectual strategy in three parts.
First, as suggested by Alan Milburn and John Hutton, he must decisively refute the Tory myths that Gordon Brown’s policies were responsible for the 2008 financial crisis and that Labour’s economic record is a cause for embarrassment rather than pride.
Second, he must convince voters that the root cause of the crisis and subsequent recession was the over-zealous application of Tory free-market principles. This had consequences for financial deregulation, macro economic management and the support or nationalisation of banking systems: faster and more aggressive government intervention was needed.
Having done all this, Labour’s economic strategy must move on to its third and most important objective. Miliband must explain that a new model of global capitalism has been evolving since the 2008 crisis and that Labour will support this evolutionary process, while the Tories will try to resist it.
The key characteristic of this economic model should be collaboration between business and government instead of the tension that existed between the two during the Margaret Thatcher and socialist eras. This supportive business-government relationship aligns closely with Labour principles, though not necessarily with past Labour policies. Thus even better economic results could be expected under future Labour governments than in the Blair-Brown era, which produced the longest period of uninterrupted economic prosperity in Britain’s history, closing the gap in productivity and living standards between Britain and continental Europe, as I argued in Prospect in February.
Intellectually, none of this should be a challenge, since the evidence in favour of these statements is clear. But Labour leaders are reluctant to challenge market fundamentalism directly, for fear of sounding like old fashioned anti-capitalists. This self-censorship is absurd. What Miliband needs to do is attack market fundamentalism, explain how it caused the crisis and denounce its dogmatic pursuit by the coalition ever since; but then…