We can and must rebalance the economy. Here’s how.

The Guardian, by Tom Kibasi

Today, most people in poverty are in working households. Despite near full employment, pay continues to stagnate for the majority of people, even while growth has occurred. The nations and regions of the UK continue to diverge. For many, work is precarious as well as poorly paid: nearly a million people are on zero-hours contracts and many more are in bogus self-employment, where employers have simply sought to shirk their responsibilities. It is a state of profound economic injustice.

That’s why the message of the Institute for Public Policy Research commission on economic justice, which I chair, is that the economy needs fundamental change.

Fundamental reform has happened twice before in the last century after periods of crisis – with the Attlee government’s Keynesian reforms in the 1940s and the Thatcher government’s free market reforms in the 1980s. Ten years after the financial crash, change of a similar magnitude is once again necessary.

But simply arguing for change isn’t enough. If people are to have meaningful hope, they need to see how it can be achieved. That is precisely what the commission intends to offer, with a detailed plan to reforge Britain’s economy. We demonstrate how building a fairer economy also means creating a stronger economy, one able to achieve better and more sustainable growth. Our 10-part plan contains 73 recommendations. Collectively, these propose the most significant changes for a generation.

Running throughout our recommendations is an emphasis on how the economy must be “hardwired” for justice, with fairer outcomes built into the way it works. It is not enough to remedy injustice and inequality solely by redistribution, through the tax and benefits system. They need to be tackled at source, in the structures of the economy in which they arise. These include the labour market and wage bargaining, the ownership of capital and wealth, the governance of firms, the operation of the financial system and the rules that govern markets. Economic justice must be the organising principle of policy, not an afterthought.

In the three decades that followed the second world war, the share of national income that went to pay rather than profits rose steadily. Over the past 30 years, however, those gains have been steadily eroded. This hasn’t happened by accident but rather as the result of deliberate decisions. The commission doesn’t shy away from stating the obvious: some people have too much power, while others have too little.

So we argue for a rebalancing of power across the economy: from corporate management towards workers and trade unions; from dominant companies towards entrepreneurs and new market entrants; from short-term financial interests towards long-term investors; from Westminster towards the nations and regions; and from individuals and households who own great wealth to those who do not.

But hope also comes from a newly engaged young generation radicalised by the prospect of being poorer than their parents, unable to find secure and fulfilling jobs, spending eye-watering amounts on rent, and without the chance of ever owning a home of their own. It is a deep sign of distress within a society when people delay starting a family because they lack economic security. Our society can do better than this.

Many other countries have economies that are both fairer and more successful than ours. We must own our challenges and choices: our economic problems aren’t the fault of others – not the EU, not “globalisation” and certainly not hardworking migrants. We have many more available choices than is commonly stated. The power to transform the economy is in our hands, and if we fail to act, it will be our failure. It’s time to take back control.