Since its foundation in 1900, the Labour party has had a Janus-headed attitude to capitalism. It needs capitalism to be successful, dynamic and job creating, even while it instinctively distrusts capitalism, with its capacity to generate extreme inequality, invest too little, cut corners and treat workers exploitatively. But its past efforts at improving things – nationalisation, top-down planning, championing strong trade unions or simply (as New Labour did) largely giving capitalism its head – have not been notably successful. It has been a standoff that the Conservative party has ruthlessly exploited.

The seismic importance of 4 July is that Conservatism’s approach to wealth generation – trying to shrink the state whose size and excess taxes supposedly “crowds out” suppressed investment and enterprise – is exposed as a dead end of stagnant living standards and eviscerated public services. Keir Starmer, boxed in by this dreadful legacy, has declared that Labour will become the party of growth and wealth generation. Only thus can sustained tax revenues be generated to repair the ravages of the past 14 years. My bet is that he has a better than even chance of pulling it off – and transforming Labour into Britain’s natural party of government.

His first advantage is that the economic evidence is unambiguous: the state does not “crowd out” investment, and low taxes do little to stimulate enterprise. What capitalism needs from the state is well-designed and stable policy that proactively manages the business cycle while “crowding in” innovation, infrastructure and abundant fit-for-purpose........

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