In his 1994 Labour conference speech, Tony Blair gambled his young leadership on a bid to abandon the party's constitutional commitment to state ownership. The gamble met with resounding approval. As one MP put it, as he made his case you could "hear the sound of pennies dropping."
Ed Miliband's 2011 conference speech, just as bold, has taken a little longer to bed in. It made arguments some considered toxic: Britain needs a new economic model, one that is more strategic, more long-termist and more productive. The state has a leading role to play in mitigating market failures and vested interests. But his subtle distinction between 'producers' and 'predators', an argument about recalibrating economic rewards and incentives, was all-too susceptible to (sometimes willful) misinterpretation. The headline writers had their headline: Red Ed Bashes Business.
Over the intervening months, and most notably in his Made in Britain speech to the manufacturers' association EEF yesterday, Miliband has fought back. Politicians from other parties have started to follow his lead: from Vince Cable's praise for the 'entrepreneurial state' to George Osborne's emphasis on supporting key industries. And by using yesterday's speech to state loud and clear that the way companies behave depends on the superstructure within which they operate, the Labour leader has further dispelled the fog that initially shrouded the patriotic radicalism of his economic credo. This will pay off.
The argument goes something like this. Whether a company is 'good' or 'bad' is not a product of the moral standards of its managers, nor for that matter their commitment to making money.
David Cameron suggested in his recent Business in the Community speech that Milton Friedman was wrong to say that "the social responsibility of business is to increase its profits." But on this matter Friedman was right.
After all, each firm is a network of relationships whose raison d'être is to generate profits. It uses these relationships to coordinate capital, labour, knowledge and markets and thus generate a return on investment. Whether the social impact of this process is 'productive' or 'predatory' depends not on voluntary Corporate Social Responsibility (welcome though that is) but on the way in which the firm undertakes this coordination. Different environments and rules induce companies to do so in different ways, some more socially beneficial than others. Hence the crucial distinction between 'good capitalism' and 'bad capitalism'; same game, different rules.
Consider Blackstone Group, the US firm accused of 'asset-stripping' the Southern Cross care home business, planting the seeds of its collapse last year. The debacle epitomised the worst of British capitalism: speculative and impatient capital, under-investment, an overheated property market, hands-off regulation of privatised public services and low-wage staff stretched to breaking point.
In 2007 Blackstone divested itself of Southern Cross, banking profits of some £1 billion. The following year it invested roughly the same amount in Meerwind, a vast German wind farm on the North Sea. Under the coordination of Germany's state investment bank, KfW, the project capitalised on home-grown engineering (the turbines, for example, are being built by Siemens) and will create over 2,000 jobs across the country. Regulators and banks are all actively engaged in the construction process, and Meerwind chiefs attribute its feasibility to long-term guaranteed feed-in tariffs, KfW's €5 billion wind energy credit facility, "Germany's comprehensive regulatory framework and incentive schemes" and the government's "tremendous leadership".
So what is Blackstone? A producer or a predator? A good company or a bad one? Of course, it is neither. Like all global businesses, it operates in different environments, doing what it takes to make profits in each of these. And whilst they are not directly comparable, the difference between its Southern Cross and Meerwind ventures are emblematic of the differences between British and German capitalisms.
Because - whisper it softly - the booming 'social market economies' of Northern Europe owe their cohesive societies neither to the redistributive state nor to individual ethical standards, but to the fact that their firms 'coordinate' their activities in a relatively cooperative fashion.
Governments engender this behaviour by providing both strategic direction and structures in which business associations, organised labour, banks, vocational training services and activist shareholders can work together in the national interest. The model amounts to a variety of capitalism that 'pre-distributes' wealth relatively equally, attenuating social divides and thus further enhancing economic strength. And as Ed Miliband noted in his speech, Nissan's latest investment in Sunderland is proof that this collaborative model can deliver high-quality growth and jobs in the UK too. It is a glimpse of what could be.
Yesterday Miliband made this argument more explicit than ever before: it is up to the government to steer Britain towards more sustainable, productive forms of economic coordination. He nailed his colours to the mast, asserting that procurement, R&D facilities, investment, regulation, tax policies, the education system and - yes - patriotic support for key national industries should all play a part. Some opponents will continue to dismiss him as 'anti-business', but as this vision takes root, they will find it increasingly hard to make the label stick.
The penny might just start dropping.