Rebuilding the centre ground - how to achieve more inclusive economic growth
When over 80% of world’s wealth ends up in the hands of a tiny minority, we know it’s time to rewrite the rules of capitalism, writes Liam Byrne
Spiralling inequality around the world is disrupting politics everywhere. Across the West voters who’ve missed out on a pay rise for over decade are hunting for new answers, fuelling the surge tide in votes for Donald Trump, Marine Le Pen, Germany’s far right AfD and indeed Brexit. So how do we rebuild a new centre ground in politics? By proposing new answers for more inclusive economic growth.
This Easter, the APPG on Inclusive Growth hosts parliamentarians from 33 countries across the OECD for the first ever Global Parliamentary Conference on Inclusive Growth here in the Houses of Parliament.
For some time, rising inequality has become the talking point in international pow-wows from Davos to the IMF’s spring meetings to the G20, which in Shanghai put inclusive growth on the top table’s agenda for the first time.
But: how do we make the leap from analysis to action? What are the policy choices that decision makers have to grasp? That’s the subject of our parliamentary conference.
From our conference, I hope we’ll get two big deliverables.
The first is a broad agreement about the framework for the reforms that need to be taken.
If we’re to make progress tackling inequality there’s simply no substitute for raising productivity – but then striking a fairer division of the spoils – between capital and labour.
That requires, on the supply side of the economy, a bigger investment in science and technology; and on the demand side, bigger markets into which to sell free of the sort of tariffs that President Trump seems determined to impose. We need labour markets that are more skilled and capital markets which are more patient. Boards need longer term horizons, economic policy making needs to be more devolved, and people - and companies - need to pay their taxes.
Around this basic agenda I think it’s possible to weave progressive reform, re-writing the rules of old institutions and proposing reform to help us spread the wealth and progress of this new global age.
Second, I think we can task the OECD with some vital work, preparing ideas for economic reform across the West. As a participant at G20 summits, the OECD has a key role to play drawing together best practice across advanced economies that illuminates the basic question of just what works - and what doesn’t.
Since World War Two there have been two great moments of consensus about the conduct of economic policy. The first emerged from the Bretton Woods settlement and the Keynsian/Butskellite Welfare state. The second emerged during the course of the 1970s as monetarism took centre stage. Now a third consensus is struggling to emerge. And the faster we find the centre ground in this new consensus, the faster we can implement reform.
Inspired by the Archbishop of Canterbury, three years ago, our group seeks to bring together partners in parliament, in the City, in business, in academia, trade unions, civil society and the third sector, to pinpoint the practical steps forward we can agree.
To fuel our contribution to the debate, backed by research partner, the Sheffield Political Economy Research Unit, based at University of Sheffield, we’ll be pursuing an ambitious research plan. Already underway are programmes of work on the ‘purpose of finance’, industrial policy and soon, the future of work and reform of labour markets.
Capitalism is not some kind of celestial design. Markets are simply a form of social technology. We create them, use them, shape them for a purpose. We get to write the rules. When over 80% of world wealth ends up in the hands of a tiny minority, we know the rules are wrong. So, it’s time to get on with change.
Liam Byrne is Labour MP for Birmingham Hodge Hill, shadow minister for digital and chair of the APPG on Inclusive Growth