Only the Left Can Defeat Technopoly, Fix Capitalism - and Finish Nationalism

Karl Marx is back in fashion. And for good reason. The 200th birthday of Trier’s greatest son was the trigger for an extraordinary wave of re-appreciation: ‘Happy Birthday Karl Marx. You Were Right!’ ran the New York Times; ’more relevant than ever’ said the Financial Times. ‘Surprisingly relevant’ wrote the Economist.

Much like the 1930’s, Marx’s critique of capitalism is becoming pervasive as we search for culprits to blame for the extraordinary surge in inequality across the West. In his magnificent book, Global Inequality, New York economist Branko Milanovic[1] sets out the scale of what has happened: an incredible 44% of the absolute gain in global income between 1988 and 2008, he concludes, has gone to the richest 5%, half are whom are American; ‘They…are the winners of globalization’ writes Milanovic, ‘in absolute terms even more than the Asian middle classes’. And the losers? Well, the great losers have been 'the lower middle classes of the rich world’.

What is the cause of this? Over the last year, a consensus has finally crystallised around a truth that has been obvious to some of us for a while: within the giant global marketplace created after the Berlin Wall came down, big business is getting bigger. And bigger. And bigger. And the biggest are sweeping their competitors, large and small, aside, acquiring the means to dictate terms to workers - and all too often, governments.

Although much of Marx’s precise theory was wrong, he was obviously right to highlight the seminal importance of capitalism’s tendencies to monopoly - and the power this gave firms to hold down wages. Marx drew on some well rehearsed arguments to argue that capitalism 'inevitably' produces monopolies. Both Fourier and Proudhon both declaimed against the great bankers and manufacturers who wielded their strength in the marketplace to eliminate the smaller trades and craftsmen. The quest for ever higher returns wrote Marx drives firms, 'frantically bent on increasing value’ in a ceaseless quest after ever more surplus value, lower costs of production and new markets to conquer, leading to the greater and greater fusion of rival firms. It fell to Joseph Schumpeter to correct the story, explaining how capitalism’s ‘creative destruction’ - ‘the essential fact about capitalism’ [[2]]- ultimately lead to the destruction of competition. And that is exactly what we have today.

In the last 20 years, Britain has seen a £4 trillion merger wave. Adjusting for the size of our economy, the Economist concluded this wave was 50% bigger than in the US, and the market concentration now unleashed, what some call ‘monopoly capitalism’ and the IMF calls ‘rising market power’ is getting serious.

Eight of the ten key consumer industries examined by the Social Market Foundation this year were found to be ‘concentrated’.[[3]] Amongst 250 different UK industries, the Economist found 55% have become more concentrated, and rates of new entrants to business had fallen in 70% of industries between 2007-14.  The Resolution Foundation reported concentration “has increased in the majority of subsectors…in the UK economy.” The IMF [[4]] concluded that price markups, which is says is a good proxy for the rising market power of leading firms, have risen almost 60% in Britain since 1980 - compared to the average rise of 38% across advanced economies.

These new Technopolies are able to use both technology and trade within global value chains (about two-thirds of world trade now is involved in global value chains that cross borders during the production process)[5] to threaten either outsourcing or automation as a way to keep wages down. This power is incredibly concentrated. About three-quarters of global total and corporate investment in research and development is now in the hands of just 500 companies; what Peter Nolan calls ‘the core of global innovation in the early 21st-century’. And the evidence is that these ‘superstar firms’ drive down workers share of the national pie. Economist, David Autor and his colleagues [[6]] conclude today, these ‘winner takes all firms’, with high profits and low wage shares, hoover up the revenue in a particular industry. So: “technology and innovation [is used] to extract higher profits leading to a lower wage share which in turn allows some to become more competitive creating the winner takes all feature within these markets.”

This has profound implications for the future of inequality. Already, the richest 1% command around 50% of global wealth – £140 trillion. But my research suggests that if nothing changes and the richest 1% pile up wealth at the rate seen since the financial crash, by 2030, their wealth-pile rises to two-thirds of global wealth - an extraordinary £217 trillion – bigger than the combined economies of most of the G20[7]. Equality will become beyond reach in the 21st century.

Helping drive this shift will not simply be incomes at the top; but incomes at the bottom, especially amongst Britain’s working class where rising automation is likely to hit some groups hard - harder in fact than others. My research shows that amongst the bottom 25% of the jobs market, (under £9/ hour), 2,128,000 jobs are at high risk of automation - that’s about a quarter of low paid jobs [[8]] and five times more than the jobs lost by the shutdown of the coal and steel industry - put together.

This takes us to the core of new Labour’s error. The last Labour government achieved many great things. But while we held inequality in check, we failed to reverse the surge-tide that took place in the Thatcher years. And unlike Germany, we failed to re-industrialise in communities hit hardest by the import shock from China. These were communities, like the community I serve in East Birmingham, that faced ‘globalisation without compensation’.  And across the country it is many of these communities that voted for Brexit [[9]].

What we did not create is what the IPPR calls, in its seminal report on Economic Justice, ‘a new economic constitution’. And this is what Britain needs today. The linchpin is a ‘mission-oriented’ industrial strategy focused on boosting our industrial base and exports – but financed on a wholly new scale, using new fiscal rules to drive up public investment by an extra £15 billion a year; a £200 billion national investment bank with strong regional banks on the ground, coordinated by four new Economic Executives for England tasked with ending regional imbalances in what’s billed as a new ‘economic constitution’. And the Bank of England’s mandate should change to include goals to keep genuine unemployment and underemployment low – and house prices down.

To rewrite the rules of the labour market, the commission proposes a real £10.20 minimum wage, set 20% higher for anyone on a zero-hours contract, with New Zealand-style ‘rights of access’ for trade unions, crystal-clear rights to join a union and trials of auto-enrolment in unions for workers in the gig economy.

In the boardroom, we should finally privilege those with a genuinely long-term perspective – aka workers – by putting workers on boards (at least two on every company with more than 250 staff) and remuneration committees, while changing company law to enshrine both a long-term view and a duty to all stakeholders.

In the capital market, new fiduciary duties are proposed for asset managers and priority rights for long term investors. New tests for takeovers are suggested plus crucial reform of competition law which introduces a new public interest test to check today’s uncontrolled Technopolies carving up the digital marketplace.

Finally, to ensure wealth is genuinely shared, a £186 billion Citizens Wealth Fund is proposed with payouts to help young people plus a total overhaul of the tax system with German-style formula-based calculations of income tax and equalisation of income and capital gains tax rates, and a slew of new wealth taxes.

It is a transformational plan, and crucially resets the narrative: equality can never be achieved by rolling back the state. Only an active state can make the difference delivering the common good, ‘where prosperity is joined with justice’. Compared to what we have today, it feels like revolutionary change.

Liam Byrne is MP for Birmingham Hodge Hill and chair of parliament’s cross-party think tank on equality, the APPG on inclusive growth.


[1] Branko Milanovic, Global Inequality: A New Approach for the Age of Globalisation (Harvard University Press, 2016)

[2] J Schumpeter, Capitalism, Socialism and Democracy, p.83.

[3] SMF, Concentration Not Competition, p.9


[5] See

[6] David Autor, et al, The Fall of the Labor Share and the Rise of Superstar Firms, May 1, 2017. The authors find: ““A fall in the aggregate labour share has a large element of reallocation between firms with shifts in output towards firms with low and declining labour shares”. These firms use technology and innovation to extract higher profits leading to a lower wage share which in turn allows and come more competitive creating the winner takes all feature within these markets.”



[9] See for instance