Theme: Political Economy | Content Type: Digested Read

Labour's ‘Everyday Economy’: Why, How, and for Whom?

Christine Berry

ashwini-chaudhary-monty--4KzDiyZjgw-unsplash

Ashwini Chaudhary(Monty)

| 8 mins read

The literature on the ‘everyday’ or ‘foundational’ economy poses fundamental challenges to orthodox economic thinking. First, it implies a different way of thinking about economic success, based on good lives for all rather than growth for growth's sake. Second, it emphasises how dominant financialised business models undermine good outcomes for both workers and consumers.

When Starmer's Labour has squarely confronted issues of power and ownership in the ‘everyday economy’, it has reaped political dividends. Does the party have the appetite to build on these interventions with a broader agenda for structural reform?

Rachel Reeves’ 2018 pamphlet

In a 2018 pamphlet, Rachel Reeves posited a focus on the ‘everyday economy’—defined as ‘the services, production, consumption and social goods that sustain all our daily lives’—as an answer to the question of ‘how Labour will generate wealth and improve work and wages for the majority’. She also suggested that this agenda could help to ‘bridge both the divisions in the country and in Labour's coalition’.

Importantly, the pamphlet recognised that this would demand a serious transformation of both Britain's economy and its politics. It argued that ‘Britain has ended up with an economy of wealth extraction rather than wealth creation’, as ‘economic activity became financialised [leading] to a spiralling of wealth upward to a small elite.’ To address this, Labour must ‘support new forms of economic ownership’. This would include an agenda for local economic democracy.

Reeves is now Shadow Chancellor. How much of this agenda has made its way into Labour's current thinking? Since the everyday economy framing does not in and of itself make the radical democratisation of the economy explicit, it has left room for Starmer's Labour to abandon this terrain as part of its general post-Corbyn retreat from talking about power and ownership in the economy. The risk is that this hollows out its transformative potential. But the opportunity is still there for a bolder approach.

Power, ownership and purpose in the everyday economy

A progressive agenda for the everyday economy must be an agenda for the democratisation of wealth and power.

First, this means reclaiming democratic space to decide what we want the economy to do for us. Regionally, policy makers are increasingly recognising that orthodox approaches – which use GDP or, at local and regional level, gross value added (GVA) as their arbiter of success – are not delivering on their ultimate objective of‘good lives for all’. Froud and Williams suggest that this could instead be operationalised through a focus on healthy life expectancy. Also relevant here is Kate Raworth's work on ‘doughnut economics’—where the goal is to achieve good lives for all within ecological limits. Within this model, everyday or foundational goods and services are valuable because of their contribution to people's ability to live healthy and flourishing lives.

Second, actually achieving these goals demands a reckoning with dominant power and ownership relations in everyday economy sectors. In particular, the UK's rentier capitalist economic model systematically rewards asset owners at the expense of workers and consumers alike. As we enter an era of‘stagflation’, there is considerable evidence that rentierism is contributing to the cost of living crisis by making essential goods and services more expensive.

Housing has become a key engine of the UK's rentierised economic model. We need to reassert the status of housing as a basic human need rather than a financial asset. The care sector, too, should be key to any strategy focussed on the everyday economy. As it stands, financialised chains are extracting large sums of money from UK care homes.’ Care is also not a sector that is very susceptible to productivity improvements: you simply cannot ‘care faster’ without compromising on care quality. The only way to drive up real incomes for care workers is to change the distribution of wealth and power between capital and labour.

Labour's approach

In January 2022 Rachel Reeves said: ‘It's not enough for an industrial strategy to focus on a small number of businesses … we must attend to the foundations of our economy… in which millions work to provide us with care, transport, energy and water.’

She argued that ‘Britain's real wealth is found—not in the bank accounts of friends and donors of the Conservative Party—but in the effort and talent of tens of millions of working people in this country’; and that any plan for growth must be ‘built on the knowledge that wealth doesn't just trickle from the top down, but comes from the bottom up and the middle out’.

There are echoes here of the structural analysis set out in Reeves’ Everyday Economy pamphlet – although this did not translate into a concrete policy agenda, and elsewhere the party has sought to set out its stall on the economy in more conventional terms.

Starmer and his team have also been reluctant to draw sharp political dividing lines—not only between capital and labour, but between rentiers and entrepreneurs, wealth extractors and wealth creators, producers and predators – presumably concerned about being portrayed as ‘anti-business’. But when the party has been willing to do this – for instance, in calling for a windfall tax on oil and gas profits – it has reaped political dividends. Will Labour now be emboldened to apply a similar approach to sectors like care, water and transport?

There have been some gestures towards an agenda for public and common ownership, such as support for a ‘community right to buy’, and the proposed ‘GB Energy’. But these seek to be as non-disruptive to existing ownership interests as possible, and the party has firmly distanced itself from Corbyn-era proposals for outright nationalisation.

Reeves’ 2022 conference speech can be seen as an attempted synthesis of these two approaches – seeking to demonstrate the party’s economic competence and trustworthiness according to conventional markers whilst also setting out an agenda on the ‘everyday economy’. Growth was still assumed as the key goal of economic policy, but tackling inequality was asserted as essential to achieving it.

The germ of a new approach can certainly be seen here—although unresolved tensions remain between orthodox and ‘new’ economic thinking. In particular, there are fundamental questions about whether a return to high growth rates is possible or desirable in the context of climate change. If this is the case, then questions of wealth distribution as well as wealth creation will become even harder to ignore.

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    Christine Berry

    Christine Berry is an independent writer and researcher, contributing editor of Renewal journal, Associate Fellow of IPPR North and Senior Fellow of the Finance Innovation Lab.

    Articles by Christine Berry
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