The Starmer model

The Labour Party’s sweeping victory in the United Kingdom’s general election already holds lessons for center and center-left parties elsewhere. But whether it will matter in the long run depends on Prime Minister Keir Starmer’s ability to address his country’s economic woes — a very tall order.

To their credit, the Tories showed respect for democracy by accepting defeat, with Conservative Party leader Rishi Sunak graciously congratulating Starmer even before the vote count was final.

Starmer’s rapid rehabilitation of the Labour Party also holds valuable lessons. Upon taking the reins from Jeremy Corbyn in 2020, just after the party’s worst defeat since 1935, Starmer emphasised moderation and policies to improve the economy and public services. His victory shows that it is possible to win elections without extremism. He promised to make democracy work better for everyone.

This is a powerful message. My own recent research shows that people become much more pro-democratic when they see democracy functioning properly and delivering in terms of economic growth, stability, public services, and low levels of inequality and corruption. The same basic formula has worked well for workers’ parties and social democrats elsewhere. The birth of the storied Nordic model can be traced to election victories by workers’ parties in Denmark, Sweden, and Norway almost a century ago. These parties first moved away from hard left ideas and rhetoric. Then, once in power, they delivered on the concrete improvements they had promised.

Transforming a party is difficult. For Starmer, it involved sidelining Corbyn and making clear that his brand of far-left extremism would no longer be on the agenda. Starmer endured many months of widespread criticism from the left, but he held firm.

Now comes an even bigger test. The import of Labour’s victory ultimately will depend on whether the party delivers, especially when it comes to reviving economic growth. Britain’s economic performance during the past 14 years of Tory rule has been rather disappointing. Per capita income growth has been slow, and the country’s leaders have failed to address an obvious productivity problem: growth in output per hour worked compares poorly to that of the United States, France, and Germany.

Recognising that a lack of public and private investment underlies the UK’s anemic productivity and employment performance, Labour has sound ideas for kickstarting a robust economic recovery. But to finance the public investments in health care, education, infrastructure, and technology that Starmer has promised, the government will need to increase its tax revenues. Starmer therefore may need to walk back a separate promise not to increase taxes for working people.

If so, he should point out that no advanced economy can achieve sustained, dynamic growth without innovating. While countries such as Vietnam and China have been able to leverage mature technologies and low-cost labor, high-income economies lack this option. They must either innovate or fall behind the global technological frontier. Although specialising in financial services can provide a boost, the benefits are temporary. And as the British example shows, becoming a financial hub for money from Russian oligarchs, petrostates, and tax evaders brings a range of societal ills.

But innovation is easier said than done. Despite the previous government’s emphasis on artificial intelligence, Britain is lagging behind in the technology race, and no amount of government emphasis will miraculously turn things around. Instead, the UK needs a coherent long-term strategy geared toward finding a niche in the broader innovation economy. Success will require more than just an old-style industrial policy of supporting specific companies or sectors.

There are also potential fault lines within Labour’s plans for making democracy work better. Responsive democratic governance means that no major public concern is ignored, and the British electorate has again signaled that it is very concerned about immigration. One reason why the Conservatives fared so poorly is that Nigel Farage’s populist, anti-immigration Reform UK party performed so well. In fact, if the Tories had captured most of Reform UK’s vote, they would have won the election.

As in the rest of Europe, the British right will face growing pressure to tilt further rightward, and Labour and other centrist politicians will need to prepare for this shift. Election after election has shown that ignoring the population’s views on immigration is not a viable strategy. Labour must make the humanitarian case for allowing in refugees, while also promising greater transparency and control on immigration overall. Finding the right communication strategy and the right principles to guide its immigration policy will be one of the new government’s biggest challenges. As someone who formerly worked both as a human-rights lawyer and as a chief prosecutor dealing with public-order issues, Starmer may be uniquely qualified to succeed where others have failed. Copyright: Project Syndicate, 2024.

Daron Acemoglu, The writer is Institute Professor of Economics at MIT