The British people have spoken loud and clear by returning a hung parliament. They have rejected a hard Brexit and a drift towards nationalism. But they have also rejected a return to the neoliberalism of the 1980s and the socialism of the 1970s.
What the electorate would like Parliament to pursue on its behalf is, however, less easy to discern. Evidence from the last 12 months suggests a number of key concerns. Part of the country remains unhappy about high levels of net immigration and the fact that certain sections of society have benefited more from globalisation.
Other concerns relate to economic issues including the fact that real wages have stagnated. Housing that is affordable is out of reach of millions of households. Although the labour market has performed well, the UK suffers from chronic underemployment where a fifth of workers are on low pay. Critically though, close to half a million well paid jobs remain unfilled as a result of Britain’s inability to train its workforce with the appropriate technical skills. These issues lie at the heart of Britain’s sclerotic productivity levels.
A hung parliament though could be the tonic that is needed to get Britain moving again. Britain has been plagued by structural issues for generations that the two main political parties have either failed to resolve or have had little interest in tackling. Strikingly though, the Labour and Conservative manifestos on some of these critical issues have started to converge.
For example, on housing, both the Conservative and Labour manifestos have pledged to reform the land market, enabling local authorities to capture the uplift in land values. The current structure of the land market is one major reason why infrastructure investment and the rate of housebuilding is so much lower than in other advanced countries. Enabling local authorities to capture the uplift in land values could boost investment across England alone by up to £185bn over the next 20 years.
When it comes to technical skills both parties have also put forward similar approaches and remain committed to the apprenticeships levy and the Sainsbury technical reforms which recommends to simplify an overly complex and utterly confusing system through 15 new technical routes. The lack of a world class technical education is one of the main reasons why firms have not been able to employ a greater number of well-paid employees.
Finally, there is also a convergence of views that the current governance arrangements between firms and society have not resulted in an optimal outcome for the common good. Both parties have proposed reform of the rules on takeovers and mergers, on fairer pay, and on improved corporate governance rules to ensure firms take account of a wider group of interests.
While the spectre of a hung parliament hovers over the Palace of Westminster, the potential for politicians across the political spectrum to work together might be the key to finally unlock the faster rate of productivity growth that has been so elusive for so long.
In order to facilitate a debate in this emerging cross-party potential, the Centre for Progressive Capitalism has published a new book entitled beyond neoliberalism, socialism and nationalism: rethinking the boundary between state and market. The book, which is a collection of 14 essays, is divided into four parts.
The first section assesses the breakdown in legitimacy of the current neo-liberal consensus. The essays explore voters’ increasing disillusionment with neo-liberalism, worries about unconstrained immigration and the politics of identity; factors that were clearly present during the various political campaigns of 2016.
The essays in the second section explore how a progressive political economy needs to embrace the market, but with an enabling state to manage its downside risks. The failure of neo-liberalism to create a framework for inclusive growth is partly related to its utilitarian underpinning which ignores the needs of individuals in society. Such reflections are not dissimilar to those posed by JM Keynes during the interwar years as faith in the then liberal order began to wane.
The third section develops practical policy ideas to resolve key systemic market failures that have acted as major barriers to inclusive growth. The essays elaborate on the persistent lack of access to housing, to equity capital for scale-ups and to technical skills education. Increasing the availability of these factors of production is central to the success of a progressive capitalism.
The final section turns to the behaviour of the corporate sector, which emphasises that the gap between the expectations of society and the conduct of business must begin to narrow. The essays highlight that firms have become increasingly divorced from the common good of society, which has reflected itself in numerous ways including rocketing executive pay and a crisis in pensions with record underfunding of pension liabilities.
As Britain seeks a new role for itself outside the European Union, politicians must urgently address the concerns raised by voters. However, without any cross-party consensus it is hard to see how these challenging issues might be resolved.
During the 1940s, when Britain’s future was last clouded by so much uncertainty, a cross-party consensus was forged between two great leaders, Winston Churchill and Clement Attlee. Although the uncertainty surrounding Britain’s future today is different, Britain’s politicians must step up to the mark and demonstrate real leadership by working together. This is what is urgently required to ensure Britain can become a country that truly works for everyone.
beyond neoliberalism, socialism and nationalism: rethinking the boundary between state and market is published by Rowman & Littlefield.
The image is ‘The British Parliament and Big Ben‘ by Maurice, published under CC BY 2.0