Compass members on creating the blueprint for a new economy

Developing an alternative for the economy is essential for creating a new settlement and a ‘good society’.

Britain needs a fundamental change in direction. The post -1980, pro-inequality, pro-market ideology of neoliberalism has brought a broken economy, a surge in poverty and insecurity and the shattering of key public services.  Political leaders and business elites have created an economy that has served the interests of capital and the already rich at the expense of wider well-being and social resilience, while continuing with a cycle of low-investment, high-profit, low-wages and high-emissions. 

Labour, with self-imposed fiscal rules and refusing to increase taxes on the better off, let alone the wealthy, is doing little to challenge this, as it dodges any commitment to even the preliminary stages of a Green New Deal. Like the Tories, it considers the economy should be run like a ‘household’, that we can only spend what we can ‘afford’ and where the key objective is to ‘balance the books’ – many of these are ideas were discredited years ago, but now make up a key component of the neoliberal agenda.  

We need an alternative economic paradigm which allows us to create and promote a new alternative model of the economy needed for a more equal and caring society, where wealth, income and life chances are more evenly shared. An economy that redirects resources away from high-emission and destructive low-priority spending towards meeting basic needs and improving wellbeing. 

We need an economy which is less heavily geared to private markets and ensures that a much higher share of economic activity is in the hands of alternative models; more co-operatives and social enterprises, new forms of non-profit making activity and to recognise the importance of decentralisation and ‘community wealth building’. In other words, a significant rise in the share of the economy that is owned ‘in common’ by all citizens. Engaging with new arguments about universal basic income, it should reject the current orthodoxy of basing economic prosperity on measurements of GDP. It should address difficult issues about economic growth through a green transition.

Year Zero, a document authored by a group of Compass members, sets out a series of proposals that will move us in this direction. As well as drawing on aspects of traditional social democratic thinking in relation to increasing the role of the state, (Bideneconomics, despite its shortcomings and limitations points the way in terms of a progressive fiscal expansion) and the need for the repeal and replacement of anti-trade union legislation with a new legal framework allowing improved opportunities for workers to secure better pay and working conditions, it also acknowledges the importance of reducing working time. With Artificial Intelligence likely to wreak huge changes in the workplace it emphasises the need to improve but also safeguard the economic position of young people. 

These proposals offer an antidote to a growing right-wing populism, challenging the Right’s traditional arguments in favour of market solutions and a low tax economy. While some proposals – from higher green investment and a guaranteed but modest income floor to the introduction of higher taxes on capital – could be implemented in the course of a single parliament. Others should be seen as a long-term strategy and would take a little longer.  What this package offers is a route to a better society. It can be read alongside other Compass documents that focus on different aspects of this. 

The New Settlement is a project from Compass that hopes to address the growing need for a new politics to build a new society. It will help to describe a post neoliberal world and the nature of a deeper democracy, political economy and state that will underpin it, along with the movement and alliances, across party, in civil society and purposeful business, that will shape it and bring it into being.

The above is an excerpt from the Compass publication Year Zero: Building a New Economy. This is the first of a series of publications produced by Compass members around the New Settlement project. Three groups of members have used their experiences and insight to create papers on each of the main pillars of the project: the good society, a new economy and a new democracy. These papers will underpin the project and set out an enticing vision of the changes we want to see, and how to get there.

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