Peter Mandelson once famously (okay, not famously, notably) declared that New Labour was ‘intensely relaxed about people becoming filthy rich’. And in many ways, it’s a sensible sentiment, even for a nominally socialist party. For wealth is a reward for wealth created. You need not go into politics or run a charity in order to good works on this earth. If you run a business that employs people and pays them a fair wage, that is wealth creation. If there’s no money being created, then there’s no money to be redistributed by the government. The pie is grown, and then those responsible for that growth get to keep a bigger chunk. The rest of us get to share in the proceeds of growth, like schools, hospitals and the Millennium Dome.
That model held, or seemed to hold, until the entire edifice of the pie (I’m in too deep with this metaphor now to simply saunter out) collapsed, having been grown, not with lovely filling (sustainable growth, new technologies), but with air (derivatives, credit default swaps and lies).
Ed Miliband’s speech at the Labour Conference was poorly received. This should come as no surprise. The Labour Leader was attempting to do what only two post-war Prime Ministers, Clement Attlee and Margaret Thatcher, have done - reinvent British politics. Tony Blair was not a Tory; he simply operated in the post-Thatcher orthodoxy. Attlee transformed his nation through nationalisation, his most famous of course being in health, whilst Thatcher achieved her place with privatisation (though of course emphatically not of the National Health Service) and the entrenchment of the neo-liberal settlement in the UK. Forget predatory companies, the subtitle of Miliband’s speech might have been ‘pro business, anti-business as usual’.
Financial markets, Wall Street in the USA and the City of London in the UK, took an enormous slice of the economic pie in the 2000s yet did little to grow it. The 1920s and 1930s had the explosion of, amongst other things, the auto industry. The 2000s had finance. Alright, it also had broadband internet, Twitter and the iPad. But how many employees does Twitter, the ubiquitous social network site employ worldwide? 300. Now the auto industry. It currently employs around 350,000 in the US alone, and that's just the people who actually make the cars. Then there are over two million who sell, repair, or fill them with petrol. Of course I’m not including the workers who drive them with massive payloads, insure them with massive policies, nor those who built and then patrolled the roads. I could go on. That is wealth creation. Who cares if Henry Ford got filthy rich? Meanwhile, finance is the mere movement around of other people’s money through huge risk taking. What the 2008-present financial crisis taught us is that this is not wealth creation. It is a zero-sum game that creates inequality and enormous instability.
The evidence is that, according to the Institute for Fiscal Studies, by 2013 there will be a further 600,000 British children living in poverty whilst those born in the early 1990s will retire 25% poorer than their parents. This is the sense of injustice that the 99% of us are feeling. That somehow the game is rigged. That those who work hard, put money away and grumble only a little bit, will always in the end get screwed by a hedge fund short selling AIG stock. And so if the game is rigged, change the game. And as obscure as it may seem, that is what Miliband is attempting to do. He wants to foster a capitalism that rewards job creators, innovators, and curtails the runaway dealings of those who see nothing beyond the quick private buck which quickly turns to public debt . This is not a straightforward distinction to make, but it is a worthy one.
The financial crisis might just have brought us into a new era of British politics. If the country is won over by Miliband’s rhetoric, his beliefs and, yes, his personality, then he might add his name to that short list of transformational figures. If not, he will, like Michael Foot, be regarded by posterity as a loser and a fool. Talk about risk taking.
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