A Labour government is going to need all the help it can get to achieve its social mission and so needs business as an ally, not an enemy. Rather than seeing markets as needing regulation to prevent them being socially destructive, the left needs a greater focus on how they can be helped to create social good.
But there are currently two major obstacles to this happening. The first is relationships. Simply put, business doesn’t trust Labour. The second obstacle is perverse incentives. Short-termism is entrenched in parts of the British economy and damaging to our competitiveness. But maximising profit in the short term, rather than maximising value for the long term, is often a rational response to the institutional incentives which present themselves to business.
So a Labour government would need to start by making it clear that it will take business to heart, not keep it at arm’s length. It then needs to focus its agenda on working with business to make it easier to do the right thing.
It should do this by making, much as David Cameron did to the Liberal Democrats in May 2010, a “big, open and comprehensive offer” to business on taking office that it will seek to govern in coalition with the private sector. This partnership – an invitation to join the government of Britain – would be founded on a clear set of principles of the government’s vision for the economy. These would be enshrined in a charter outlining what business could expect of government and what government could expect of business.
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