13/09/2018 17:47 BST | Updated 13/09/2018 17:47 BST

McDonnell Is Presenting Even More Than An Alternative To Thatcherism

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John McDonnell’s bold workers fund plan is the kind of far-reaching thinking the left needs - first to overturn Thatcherism, then to transform economic life in Britain altogether.

The draft policy, which we can expect to be part of the next Labour manifesto, would see larger companies having to set up funds for workers in order for them to gain financial stakes in their firms and gain a meaningful say in the workplace. The proposal is absolutely vital for two reasons. Firstly, it moves the party away from the positive, progressive but sometimes overly unambitious ground of the last manifesto. While secondly, it firmly grasps the problem of economic structure, answering it with a democratic alternative.

Ten years on from the great recession, ordinary people - particularly those responsible for generating the world’s wealth - have been hammered and left with a shrinking share of the wealth they produce. And there is a strong case that what ordinary working people need isn’t just a smattering of ameliorative reforms to workers rights and some increased public spending - though Labour has offered the best of these. What may well be needed is policies which identify and address the core power relations in the economy and present coherent alternatives.

By giving workers a share in the profits which they produce and ultimately a stake in large companies, McDonnell is proposing to give them a chance to have a say in the economy- a first glimpse at economic democracy.

The proposal could take a Labour government beyond the frontiers of conventional social democracy and into the realm of something more transformational. For that reason it’s amusing that Philip Hammond’s response to the announcement made no reference to the plan, its logic, workers’ rights or ownership of industry in any sense.

It’s worth noting that the policy, like its antecedent the Meidner Plan from Sweden, comes from an unusual synthesis of radicalism and compromising social democracy. The plan makes an immediate promise of giving workers a share in the profits of business, an amenable class compromise; but it also presents a route towards handing employees a significant stake in the economy.

The policy chimes with the kind of sentiment specified in last week’s IPPR report which suggested that workers should have ‘a greater stake and voice in their workplace’, concretising that view.

It also builds on a trend in recent left-wing thought to emphasise decentralised ownership of the economy and economic democracy as paths out of the current malaise. Rather than re-enacting the sweeping nationalisations of the Attlee government, or the attempt to do this again by the 1974-79 Labour government, the plan presents a significant opportunity to move towards a ‘mutualised’ or ‘co-operativised’ form of economy. It’s also worth noting, that for better or for worse, Mcdonnell’s current proposal would only affect larger firms, whereas the original Meidner Plan would have targeted relatively smaller firms.

It is not clear whether the policy is intended to be quite as impressively ambitious as the original Meidner Plan, with the possibility of the worker funds only being incentivised. In that case, unscrupulous firms might simply avoid sharing their profits with employees and ensure that the policy only develops unevenly. Yet, regardless, the McDonnell plan would challenge the outsized influences of shareholders in the way the economy is run, doing so in a way decisively in favour of ordinary people.

Moving the economy towards a co-operative model with everyone involved in the process, having a real say over production, pay and the overall distribution of resources within a firm would be a momentous step forward. It would be a step which would be very much in the spirit of Keir Hardie, Bevan and other leading lights of the Labour movement.

Giving employees a say in the day to day management of firms would be a key instrument in diffusing the power of the industrial aristocracy, handing it down to communities. It’d allow questions around remuneration, benefits and practices to become democratically accountable. In short, it could represent a huge chance to extend the sphere of democracy.

If taken to its logical conclusion the policy could lead us to something which quite closely resembles the kind of socialistic economy depicted by Ralph Miliband in Socialism For A Sceptical Age, a vision of a society that is ‘cooperative, democratic, egalitarian’.

Pairing the policy with a new department, say Jeremy Gilbert’s idea for a ‘Ministry for Mutuality’, which could undertake a range of activities to promote employee-run companies, would help to ensure that a Labour government could undertake the great task of transforming the economy. This would no doubt provoke waves of opposition from those who stand to lose power or influence, yet Labour should be ready to take it head on.

More policy-making needs to be in this vein. It is time for a dramatic, radical alternative in housing too, one which draws on the wealth of ideas within the wider labour movement. Nonetheless, McDonnell’s plan could grow into one of the most tenacious economic alternatives proposed by any party for decades.