Miliband's manifesto for 'responsible capitalism'

There are people out there who harbour hopes that a future Labour government under Ed Miliband would be a radical administration that responds to ordinary people’s aspirations. Dream on.

What is made clearer each time Miliband or shadow chancellor Ed Balls speaks is that they accept lock, stock and barrel that the first priority will be to reduce the public spending deficit. If elected, Labour would carry on where the Tories leave off.

That was the hardly-disguised implication of Miliband’s speech yesterday at the stock exchange where Labour came down in favour of what is known as “predistribution”. You read that right, not redistribution but predistribution.  

"The redistribution of the last Labour government relied on revenue, at least in part, which the next Labour government will not enjoy," Miliband told his audience ."The option of simply increasing tax credits, for example, in the way we did before will not be open to us … fiscal circumstances will make it harder not easier."

Now, in the dim and distant past, Labour was in principle in favour of redistribution. In fact, that was the raison d’être of voting for Labour in the first place. By way of taxation, housing, education and state-owned utilities, the inequality/wealth gap would at least be held in check, if not narrowed

That philosophy went out of the window in the 1990s, when New Labour came into existence. As Miliband said: “In the 1990s New Labour rightly embraced markets, most famously in our change to Clause 4. The party embraced the creativity of capitalism.”

In came the love for deregulated market capitalism and so-called trickle-down economics. Except the trickle became a tide heading in the opposite direction. Inequality grew as the better off increased their share of wealth. One report published just before the last general election concluded: “Households in the top tenth have total wealth (including private pension rights) almost 100 times those at the cut-off for the bottom tenth.”

Millions were condemned to low wage, unskilled jobs as the corporations moved skilled manufacturing jobs to Asia. House prices soared out of the reach of most people, while rents in private and social sectors became unaffordable on wages alone. Many households were forced to live in permanent debt, and still do.

Neither the minimum wage – which you cannot live on – nor tax credits made a substantial difference. But even those measures are being abandoned by Miliband in favour of predistribution, a term coined by political economist Jacob S. Hacker who has advised the Democratic Party in the US.

So what does it mean? It is little more than encouraging capitalism to be more “responsible”. As Miliband told his audience: “"Predistribution is about saying, 'We cannot allow ourselves to be stuck with permanently being a low-wage economy and hope that through taxes and benefits we can make up the shortfall. It's not just, nor does it enable us to pay our way in the world. Our aim must be to transform our economy so it is a much higher skill, much higher wage economy.”

And, pray, who is to achieve this laudable aim? Not the government, not the state. Yes, you’ve guessed it, the employers! Miliband claimed that “the move towards a more responsible capitalism is actually being led by many business people”, by companies who know that firms “flourish best when rewards are fairly shared”.

This will come as news to the vast majority of workers, who real incomes have fallen sharply since the economic and financial crisis broke five years ago (with much worse to come at the end of this year when food, fuel and transport costs soar).

Just in case his audience was in any doubt, Miliband finished his speech by declaring: “And I believe creating this responsible capitalism will be better for our country. A responsible capitalism is a resilient capitalism.” Vote for that? You are joking!

Paul Feldman

Communications editor

Unions should block sanctions against unemployed

Thousands of unemployed young people are working for supermarkets without pay for months on end, with the constant threat of losing their measly benefits if they leave, while others are on enforced “mandatory work activity” schemes.

The ConDems, building on New Labour’s regime of withholding benefits from the unemployed, have created a reserve army of young people simply to boost employers’ profits and cut public spending.

More than a million aged between 15-24 out of work. That is 20% of economically active people in that age group. Unemployment, which has been rising since 2007, is as high as in the early 1980s and now stands at 2.62m, the highest since 1994,

Of course that does not include many formerly self-employed, who wait a long time to qualify for benefits, people on disability benefits who are looking for but can’t find appropriate work, and women at home with small children prevented from finding work by soaring childcare costs. The real figure is closer to 4 million.

The unemployment figure includes 286,000 students looking for part-time work to get them through their studies. Some 80% of teachers surveyed earlier this year said they were encountering students in schools and colleges who did not get enough to eat, or to buy clothing.

Many good job and training schemes for young people have had their funding cut. So far the Coalition’s main contribution is a scheme where young people work for companies like Sainsbury, Poundland, Tesco for up to six weeks with no pay. It is meant to be voluntary, but if they even express a slight interest in the scheme, and then withdraw, they lose their miserable £53 a week job seekers allowance for up to six months.

It is suggested that some retailers are exploiting this scheme to get ready for the Christmas rush, instead of taking on temporary workers as they would normally. According to the Institute for Public Policy Research, employers are using government subsidies for apprenticeships to train people aged over 25 they would have hired anyway. Only 37,000 of 126,000 apprenticeships went to 16-24 year olds.

Under the new “mandatory work activity” scheme, young people are given no choice from the moment they sign on and can be sent to work for private firms or the voluntary sector for months on end. Lawyers say this is a modern form of slavery and are challenging it in the courts.

Brendan Barber of the Trades Union Congress says the Coalition must “stop the risk of losing a generation to unemployment and under-achievement by guaranteeing a job or high quality training to every young person out of work for six months”. Pathetic! What about: “The TUC will organise every unemployed worker into a mass movement to remove the Coalition government.” You won’t hear that any time soon!

Young people have done everything asked of them. The number without a qualification has decreased dramatically, and more and more make sacrifices to stay on at college or university. In 2004, 33% of 19-year-olds lacked a basic qualification; by 2010 that figure was down to 18%. Though almost half of young adults do not have a Level 2 qualification (such as GCSEs) at age 16, by the time they reach 21, most have remedied this and the proportion is down to one fifth.

Young people were the driving force of the movements that toppled regimes in Tunisia, Egypt and, before NATO intervention, Libya. They have everything to gain from political and social change and nothing to lose. With the economy heading for recession and more spending cuts on the way, it is clear that capitalism isn’t working and we should make it history. Offering young people the opportunity to join a people’s assemblies movement to transform society is the most important thing we can do.

In the meantime, the trade unions should instruct their Jobcentre Plus members to refuse to impose sanctions on young people looking for work, training and decent pay. Carrying out government orders which turn people into slaves is unacceptable.

Penny Cole

Pay to work and cheap interns future for young workers

During the 40-or so months since the crash of 2008 a new wave of caring, sharing philanthropy has risen slowly to the surface, culminating in the Bellagio “summit” now under way on Lake Como.

The summit’s origins are traceable back to Standard Oil’s profits in the 19th century, so it’s hardly a new idea. But it seems it’s time has come, at least for those extremely rich entrepreneurs trying big time to salve their consciences, and save their skins whilst finding a new way forward for the capitalist system.

Bill Gates, the one individual with the highest public profile, made his mark with his wife by establishing the Bill and Melissa Gates Foundation, and in 2010 launchin “the Giving Pledge”. This encourages the world’s richest to give much of their accumulated wealth to good causes. And it’s all of a piece with the turn to self-reliant, “resilient” communities.

Their good work is clearly a big part of the inspiration behind the Big Society of David Cameron (who yesterday refuted the idea put to him by a parliamentary committee that the occupation of St Paul’s was an example of communities taking on more responsibility).

As economic growth gives way to contraction and austerity bites, the softer edge of services that can no longer be afforded like libraries, luncheon clubs for the elderly and infirm, rural shops and post offices, are being offered to those that value them to run them for nothing as the charitable acts of philanthropic volunteers.

But with the crisis biting ever harder, things are moving on apace. Capitalist society is at the crossroads. Not only are (some of) the already rich giving away their money (well, at least some of it), but those who are still hoping to get rich are breaking the wage labour contract or inverting the direction of value that traverses it.

For some years, young people have been first encouraged, then more or less obliged to seek “work experience”, either unpaid or at the minimum wage, in order to make themselves attractive in the jobs market.

More recently the Coalition has been promoting the wider use of internships as part of its drive to improve social mobility, but government lawyers have warned that growing numbers of companies may be breaking the law, turning to interns to carry out work that lasts far longer than traditional work experience placements, yet refusing to pay them.

Entrepreneurs have seized upon young workers as a source of low cost and enthusiastic labour. Steve Lowy, founder of three-star hotel brand Umi, has used 100 interns since he set up his business in 2007, from one week slots for GCSE pupils on work experience to year-long placements for hospitality students.

Of the arts internships advertised on the Department for Business Innovation and Skills-sponsored website, 92% were unpaid. Almost 80% of advertised fashion internships were unpaid, and 76% of PR internships were unpaid. Half of the media internships were unpaid.

According to Chartered Institute of Personnel figures, there are between 50,000 and 70,000 internships a year. Between 10,000 and 15,000 of these are unpaid. And in the largest online UK internship survey to date, carried out by Interns Anonymous, out of 594 respondents 87% said they were paid below the national minimum wage.

And now it’s becoming a case of pay to work. Selling internships has become a business in itself. The Tories auctioned off internships at City hedge funds at its Black and White ball in February to raise thousands of pounds for party coffers. Start-up company Etsio has made selling internships its business model. They charge interns up to £100 a day to get work experience in small, specialised businesses.

Nice work if your parents can pay to get it.

Gerry Gold

Economics editor