Labour’s ‘Buy British’ Policy Could Be the Start of a Bold, New Economic Approach

Neoliberalism is dead. The party must propose something better.

by Nick Dearden

15 July 2021

Labour leader Keir Starmer having a pint of Guinness with Hartlepool by-election candidate Paul Williams
Keir Starmer/Twitter

After snatching victory from the jaws of defeat in Batley and Spen, and fuelled by a desperate to dispel accusations that his party ‘doesn’t stand for anything’, Keir Starmer has announced a new Buy British policy, pledging to “make, sell and buy more in Britain”. 

Is this a superficial attempt to reconnect with a ‘white working class’ demographic, a group the Labour leader clearly views as nationalist and reactionary?

It’s tempting to see Buy British as at one with the cringe-worthy ‘Happy St George’s Day’ leaflets in Hartlepool and Starmer’s doomed attempts to outflank the Tories on law and order. And maybe it is. But, behind the slogan, the policy might actually suggest Starmer has learnt something from previous leader Jeremy Corbyn – or perhaps more likely from Joe Biden, who recently announced his own Buy American policy. This signals toward a genuine realisation that the age of free market neoliberal economics is over.

At the heart of the policy is the idea that the government’s massive procurement budgets should prioritise British companies instead of awarding contracts to the cheapest providers of goods and services in the international marketplace. But for it to have any impact, it must be part of a strong industrial strategy, which will ensure that workers’ rights are respected, environmental policies are strengthened and value is retained within communities, rather than fleeing into offshore tax havens. 

In other words, the purpose of the policy must be less about buying from British suppliers, and more about shifting power from the international marketplace, where the super rich reign supreme, back to the local level where, at least in theory, governments can use their power to shape both what is produced and how it is produced. These sentiments were, to some degree, alluded to by Labour’s shadow chancellor, Rachel Reeves.

Until the mid-1990s, this would have been regarded as basic social democratic economic policy. But, with Tony Blair and Bill Clinton at the vanguard, social democracy jettisoned its previous commitment to economic intervention and embraced the rule of the market. 

For Blair, debating the direction of the neoliberal global economy was pointless. “You might as well debate whether autumn should follow summer,” he told the 2005 Labour conference. From the mid-1990s, the rule of the market became international law, thanks to the newly created World Trade Organisation and dozens of trade and investment agreements. 

Traditionally, free trade was about keeping tariffs low so goods could move around the world relatively uninhibited by taxes. But in the ’90s, the rules became something akin to corporate charters, protecting the rights of big business and investors to move goods, services, and, crucially, capital around the world, free from any sort of government interference. 

Today, public services are also seen as being unfair competition to the private sector, and so should be liberalised wherever possible. While, any attempt to regulate capital – a prerequisite to preventing economic crises and ensuring investment is actually useful to people – is seen as an obstacle to the God-given right of big business to make money wherever, whenever, and however it can.

Many modern trade deals even include clauses that allow big business to sue governments for treating them unfairly. This ‘corporate court’ system has seen governments sued for putting cigarettes in plain packaging, for freezing water prices to protect citizens supply of this basic service and, most recently, for trying to phase out coal power.  

Potential in Preston. 

This system is global. But its impact is felt on our high streets, where wealth flows out of our pockets and, rather than being recycled in our communities, ends up in the coffers of gigantic corporations, hidden within tax havens and financial centres.

But in places like Preston in Lancashire, this kind of economic logic is being challenged at a municipal level. In the wake of the 2008 financial crash, Preston’s Labour council decided to try something different to rebuild the city’s broken economy. Using local government power, procurement budgets and investment funds, the council spent more money locally and began to build up local business and cooperatives, creating more jobs – and better paid ones – in the process. In this way, local money was used to build community wealth. 

It wasn’t done to try to feed off or fuel nationalism or a ‘my region comes first’ kind of narrative, but simply to transform a corporate-dominated economy in which a tiny fraction of the money spent locally stayed in Preston. The project has been a huge success, and Preston joins many ‘transformative cities’ that are trying to challenge and transform the neoliberal economy from below.  

During their time at the helm of the Labour party, Corbyn and John McDonnell saw Preston as a source of inspiration; a model that could be rolled out right across the country. Similar ideas lie behind Biden’s plans to rebuild the US economy, using the same Buy American formulation as Labour, and plans to use procurement and investment in order to rebuild the American economy and create more jobs. Biden understands the global implications of this too, showing no interest in signing new international trade deals, much to the dismay of Boris Johnson who is desperate for a US trade deal.

A new approach.

So, is Labour’s new policy proof that Starmer accepts neoliberalism is dead and that we need to create a new form of social democratic economics in its place? Or is it merely a gimmick to appeal to a caricature of the sort of voter he believes Labour needs to win over? After all, the Tories have made an art form out of preaching to the public to buy national produce, while at the same time hollowing out domestic industry and farming. 

Right now, it’s too early to tell. But a few lessons can be drawn out of last week’s announcement. First, Labour is right that procurement – as with investment and the power of government more generally – needs to be utilised far more effectively if we’re to build an economy that reflects the interests of the many. While this is a drastic change from where we’ve been in recent decades, it is hardly revolutionary in historical terms; just a necessary move away from free market fundamentalism. 

That said, if the party is actually serious about taking even these modest steps, it will need to develop consistent policies across the board. Meanwhile, activists on the party’s left will need to push for more radical forms of economic democracy.

Starmer must also do what even Corbyn could not quite accomplish: end Labour’s support for liberalising trade deals, forging a very different system of global trade. This doesn’t mean embracing protectionism, at least as it is traditionally understood. There’s plenty to be gained, taught and learnt by trading. But tariffs are at historically low levels already, and further trade deals – at least as they’re currently written – will simply encourage deregulation, liberalisation and environmental destruction.

In the last few years, we’ve seen the breakdown of the argument that liberal democracy and neoliberal capitalism are natural bedfellows. Indeed, it’s become increasingly clear that our monopolistic, highly unequal and deeply unsustainable global economy is actually incompatible with democracy. 

The race is on as to what sort of economy will replace neoliberalism. And, with a byelection victory in Batley and Spen securing Starmer’s position as leader (for now), it is vital that the Labour party finally spells out a clear vision.

Slogans like Buy British send worrying signals that the party wants to imitate the nationalistic form of authoritarian capitalism pursued by right-wing governments around the world. But beneath the unhelpful rhetoric, the policy may contain the first glimpse of a new approach, where communities are empowered to build wealth from the bottom-up. This is the kind of new economy Labour must forge.

Nick Dearden is the director of Global Justice Now. He has been a campaigner against corporate globalisation and for global economic justice for over 20 years.

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