Reframing the Recovery Debate

Part of the Bord na Móna group, Advanced Environmental Solutions is an example of public enterprise.

Progressives need to reframe the discussion on recovering from the pandemic around a new, public-driven business model, writes Michael Taft.

The public debate is being limited to a very narrow space – reducing the policy options to increasing taxation or reducing public spending (or both), because as we all know: ‘we can’t keep borrowing forever’. Of course, progressives must enter this debate. The resources needed for social and economic investment cannot be sustained on our current narrow tax base. And while the income supports are welcome we will need policies to ensure people can return to work (reducing unemployment costs) and, just as importantly, return to quality jobs (reducing the prevalence of low-road employment). 

Therefore, we need to reframe the debate. And for progressives, this new frame should be rooted in driving a new business model. The projections are necessarily tentative but nonetheless grim. The ESRI projects that even under their benign scenario nearly 250,000 jobs could be lost this year, while a worst case scenario would see 350,000 jobs lost. The Fiscal Council projects that nearly 500,000 jobs will be lost in the second quarter this year, with only half of them returning by the end of 2021. 

It’s not just job losses. The worst impact will be experienced in the low-paid sectors such as hospitality and retail. We should expect downward pressure on wages and working conditions as these sectors recover, with a rise in precariousness and in-work poverty.  Quite simply, with demand for jobs outstripping supply of jobs, working conditions can potentially deteriorate.

“By focusing on the transformation of the current business model, progressives can open up a new front in the economic debate.”

Driving quality employment is one aspect of a new business model. The crisis has crystallised the role of enterprise (along with public services, social protection and investment). We are now seeing what was always evident but hidden by ideology and orthodox managerialism: that enterprises are social assets; that business is (or should be) accountable not only to its owner but to the wider social interest. Actually, this was articulated by Seán Lemass as far back as the 1950s. This calls for a new public-driven business model that cuts across the public and private sectors. 

This is a big canvas with at least three distinct elements.

First, the expansion of current public enterprises and the creation of new ones. This is about driving employment, investment and value-added in the market economy which, in turn, will drive private sector activity. Public enterprises are essentially investment-driven vehicles. Released from the logic of shareholder value, they are free to maximise the social utility of profits; namely, investment. 

When we refer to public enterprise we understandably think of the big ones: ESB, Bord na Móna, CIE, Eirgrid, etc. But do we know of Abargrove (catering), Advanced Environmental Solutions (waste collection), or Greener Ideas (a joint energy venture)? The CSO lists over 200 public commercial companies in the non-financial sector and nearly 40 such companies in the financial sector. Many of these are subsidiaries of larger public enterprise companies, while some are project-specific (e.g. a wind farm). Nonetheless, there are a considerable number of companies which can become instruments of growth – and this doesn’t include a number of non-market public agencies which nonetheless support market activity such as Bord Bia and Bord Iascaigh Mhara.

Nor should we see public enterprises as only national bodies. We can carve out a new role for local public enterprises that are supported by local and regional government and agencies. This would require institutional reform but, as the National Economic and Social Council pointed out in its recent proposals regarding ‘Just Transition’, the best response is local because local communities and economies have different needs, strengths and abilities.

Second, a public-driven model should not be reduced to an exclusively state response. Democratic models such as labour-managed enterprises, civil society enterprises, hybrid enterprise models (local public enterprises that are labour-managed or local community managed) and other forms of democratic business models can play an important part in, especially, local-based policy. Again, this requires stronger local and regional governments and agencies. And given the small to almost non-existent presence of cooperatives in Ireland, considerable resources will be needed to publicise and support such initiatives. 

Third, we need to find ways to transform private enterprise practices. The legal right to collective bargaining and regulation, as well as traditional incentives (tax relief, grants) all have important roles in transforming our current business model. These can be supplemented with an explicit state policy to promote what can be called ‘public purpose enterprises’ – businesses that can avail of an advanced suite of state supports on the basis that they promote collective bargaining and employee participation, prioritise investment (in R&D, new skills, market expansion), reduce inequalities in wages and the gender pay gap, and promote environmental sustainability. In this way we can demonstrate the competitive advantage of market enterprises that commit to greater democracy, investment and climate justice.

By focusing on the transformation of the current business model, progressives can open up a new front in the economic debate. While we will need to fully participate in the fiscal debate (borrowing, deficits and debt, taxation, etc.), we must also show that the fiscal is a reflection of enterprise quality, and that enterprise quality is a function of democracy. The increasing participation of people in the generation of employment and value-added can launch the Irish economy on to the high road. 

To paraphrase Keynes when he referred to unemployment – look after enterprise quality and the budget will look after itself.