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Will John McDonnell tame capital or exile it?

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Jeremy Corbyn's speeches are usually a compilation of his greatest hits, what you might call "Now! that's what I call socialism" - and they typically contain a call for more children to have access to musical instruments in schools, a tirade about supplying arms to Saudi and a pledge to destroy neo-liberal economics.

His shadow chancellor, John McDonnell, is altogether less flowery and more grounded. He gets his teeth into what he perceives to be a problem and then does not let go.

The problem he has identified is the transfer of power, money and security over the past 40 years from workers to capital, from young to old, from north to south, from poor to rich. And this is not some lefty fiction: ask the Bank of England, which is not a den of reds under beds, or consult the prime minister's famous speech on the steps of Downing Street on 13 July 2016.

We are living through the longest period of stagnation in living standards since the early nineteenth century. Employment has risen while security of employment has collapsed. Too many people in work are forced to use food banks - as the Old Etonian Archbishop of Canterbury Justin Welby pointed out on Peston on Sunday some time back.

The shadow chancellor spoke at the Labour Party Conference. Credit: PA

The answer, according to John McDonnell, is a word that was almost an obscenity in Britain for more than 20 years, "socialism".

McDonnell has a raft of interventionist policies that in theory would shift power and money from owners and managers on the one hand to workers more dramatically and decisively than those of any government since 1945.

And the big question is whether what he is proposing are old-fashioned and obsolete solutions to thoroughly modern problems, or a modern take on socialism that stands a chance of healing the UK's widening social demographic and geographical divisions.

This is not easy to answer.

The heart of the uncertainty is a related question: is he really trying to find new ways for people to organise and act collectively, or is his approach designed principally to reverse the long decades of remorseless weakening of traditional trade unions and their mostly male, white, middle-aged general secretaries?

If his policies turn out largely to be about giving the traditional trade unions, Labour's paymasters, an opportunity to take revenge on the hated boss class, they'll end up leading to strife and the flight of capital and internationally mobile businesses from these shores.

But if they are actually about new forms of democracy within the workplace, they could be empowering for workers and executives alike.

John McDonnell's ideas have the potential to be empowering for workers and executives. Credit: PA

The problem is that McDonnell and his team have produced plenty of headlines but precious little practical detail.

So we know that Labour wants to allocate a third of seats on boards of companies employing more than 250 people to workers.

Now if those boardroom seats are in practice controlled by existing trade unions, one form of lumbering centralised corporatism could be replaced by another. That's certainly possible, given the associated reforms Labour wants - to set pay for whole industries collectively, and make it easier for unions to recruit in the workplace, for example.

There's almost identical uncertainty around the governance of new Inclusive Ownership Funds, which would control up to 10% of all bigger companies - again those employing 250 or more - for the benefit of workers.

It is not at all clear who will be the trustees of those funds. But if they were union reps, they might be less creative and consensual than would be ideal.

So the proof of the pudding will be the institutional structures put in place.

The Labour Party no longer seems wary of the term 'socialism'. Credit: PA

There is one version of what McDonnell proposes that could be a new form of wealth-creating co-operative capitalism; there's another that could be bureaucratic, statist, and impoverishing to rich and poor alike.

What presumably McDonnell knows is that the more he presents these policies as an assault on business, the less effective they will be.

He has already created huge opportunities to game the proposed new system. If it is implemented, we’ll suddenly see a bulge in businesses employing 249 people and rewarding directors and owners through interest on debt capital they invest rather than dividend-paying equity.

Or to put it another way, if he is serious about healing the ripped fabric of the UK, he will resist the temptation to cast all bosses and owners as universally rapacious and ripe for fleecing.

In my experience, most bosses - not all - would agree that there has been too great a shift of money and power away from most working people.

But McDonnell has been around this track long enough to know that if they think he’s coming for them, they’ll have no compunction to shift their money, skills and employment opportunities away from him - and away from the UK - faster than you can say “for the many, not the few”.