What can Starmer learn from Biden? Now is not the time for timidity
The severe crises humanity faces will not be solved by the outdated rules of the global economy. Keir Starmer came close to recognising this in his new year’s speech, when he spoke of his plans for “mission-driven” government. The phrase – borrowed from Mariana Mazzucato – implies governments setting economic goals (say, 100% renewable energy) and single-mindedly driving that goal forward through investment and regulation.
In essence, this is an acceptance that government planning, state intervention and public ownership, so derided over 40 years of neoliberalism, are necessary tools of government today, and it’s what makes Labour’s industrial strategy central to any progressive offer to the country.
But Starmer will need to go much further. First, Labour needs to be clear that any government support to the economy must come with serious strings attached. If the public is not simply paying for super-rich people to get even richer, then state support must require business to behave very differently. Second, Starmer’s Labour needs to realise that this way of operating is fundamentally at odds with some of the rules of the global economy – rules often written by big business to secure a right to operate how it wants, where it wants.
Here, Labour can learn much from the US, where President Joe Biden, who previously supported corporatedominated free trade agreements, has responded to the growing ire against unfettered capitalism. In his State of the Union speech on Tuesday, Biden railed against the corporate monopolies that are “taking advantage of you”. He laid out a different path to the market-knows-best trickle-down economics that has enabled grotesque levels of corporate greed and intensified the many crises we now confront, not least climate breakdown.
Significantly, Biden has recognised that when the state is providing vast amounts of funding – for dealing with the climate crisis, for instance – governments need to set the terms. That’s the backbone, for instance, of Biden’s flagship Inflation Reduction Act, a necessary set of industrial policies aimed at helping the US transition to a greener economy by incentivising the growth of a domestic renewable-energy manufacturing base. As Melinda St Louis of US pressure group Public Citizen says: “For workers in North America, that must mean creating jobs in a sector of the economy that has been historically more unionised than other sectors, and has thus provided higher wages than others.”
Starmer has also made significant promises in this area, with renewable energy identified as a key “mission” for industrial strategy in Labour’s first term, including promoting local production, building a national wealth fund, and creating a public energy company. This is all potentially positive stuff. But Labour must be much clearer about how this builds public, as opposed to corporate, value. In particular, if the British government takes an equity stake in companies, how will it use that stake to promote the public interest, not only within the UK, but also globally?
Although Biden’s final bill was severely weakened by wrangles in Congress, it injects unprecedented funding into the economy. At the same time, it curtails the power of corporate America – for instance, cracking down on big tech monopolies and demanding big pharma provides cheaper medicines, albeit in a much more watered-down form than Biden wanted. Starmer has been silent on this. Sure, he has spoken of the need to unleash innovation. But unless this innovation is accompanied by a much less harsh intellectual property regime, which is at least partly publicly owned, this innovation will only benefit the few. This is as true for climate technologies as it is of new cancer treatments.
Of course, there are obstacles.
Biden’s plans have come up against global trade rules. His green industrial policy is now at the centre of a major trade dispute with some of its closest allies – including the UK. The European Union and the UK demand that the US must change the Inflation Reduction Act to include European manufacturers, arguing that in its current form, it violates the unquestionable rules of the World Trade Organization, under which government policies that support domestic manufacturing are viewed as “discriminatory” towards multinationals.
Many would argue that the US has little right to decide when and where it bypasses rules that it spent the last few decades pushing on to the rest of the world. But we should defend policies that allow all countries to develop their own industrial strategies to build fairer, more sustainable economies. Rather than pushing back on US policy, Starmer should be clear that it is the trade rules that need to give. What’s more, the US, like all powerful countries, must now promise not to challenge reasonable industrial policies passed elsewhere around the world.
To date, though, Starmer’s move to embrace industrial policy is constrained by his determination to cosy up to business and to display excessive fiscal prudence. In office, he won’t have this luxury. To protect his industrial policy, to build a more equal world – indeed, just to maintain an electoral coalition – Starmer will need a more combative approach to big business and the rules of the global economy. Biden is further down this road already. There’s much Starmer can learn.
Nick Dearden is director of Global Justice Now (formerly World Development Movement)
cause they do not want to become involved in strikes into Russian territory. There are also logistical and support reasons why fighter planes are not going to be sent to the frontline any time soon. Nevertheless, as Mr Sunak said on Wednesday, the issue is now on the table.
The trip is really about boosting morale and increasing western arms for Ukraine more generally. On that front, substantial moves are already under way. The donors’ meeting in Ramstein in January was similarly portrayed as being largely about battle tanks, but the package agreed there also included fighting vehicles, improved air defences and more mobile artillery. All of these are vital to any Ukrainian offensive. The first tranche of US fighting vehicles and French combat reconnaissance vehicles are already on the battlefield.
Although the EU summit on Thursday was not specifically about weapons pledges to Ukraine, the weeks since Ramstein have seen even more commitments and serious momentum. On Tuesday, the German, Danish and
Dutch defence ministers announced they would provide Ukraine with at least 100 refurbished Leopard battle tanks. More seem likely to follow, perhaps including Challengers from the UK. Ukrainian soldiers are being trained to use them. In January, Mr Zelenskiy asked for 300 tanks. He is getting closer to securing them.
The worry – and it is a real one – is that Russia will be ready to advance, albeit also ready to take heavy losses, at the month’s end, before Ukraine is ready to launch its enhanced battle formations. It is a race against time, which is why Mr Zelenskiy has been at his most persuasive and urgent this week in pressing for the support he demands.