The right still leads the policy discourse in the UK today. Its nostrums are the common currency not only of the Conservative Party, but also the Labour government. That this is not obvious is a measure of their success, and their shrewdness. They have long presented themselves as outsiders and radicals, challenging an incumbent elite which they long ago won over.
Ben Southwood, Samuel Hughes and Sam Bowman, in a pamphlet called “Foundations: Why Britain has stagnated”, propose policies they take to be novel, and which are, they claim, rejected by the British elite. They ringingly state that: “We believe that Britain’s political elites have failed because they do not understand the problems they are facing.” They go on: “No system can be fixed by people who do not know why it is broken. Like the elites of Austria-Hungary, Qing Dynasty China, or the Polish Commonwealth, they tinker ineffectually, mesmerised by the uncomprehended disaster rising up before them.” Many on the left will whole-heartedly agree with this analysis.
But what this document really does is to tell the elite what they already believe. What otherwise is its radical insight? “Foundations” claims not only that Britain has suffered a lack of investment, but that, “Britain has denied its economy the foundations it needs to grow on.” Its central claim is this: “The problem is not too little investment by the state. It is that the state has prohibited most of the investments we need to make. The solution is to remove these obstacles to investment, mobility and trade, in a politically viable and durable way.” In other words: an invitation to double down on existing market fundamentalist principles rather than to change them.
But the elite has believed this yarn for decades and has consistently acted to deregulate, to privatise, to leave things to the market. Grenfell was an accident, but its incendiary cladding was not. Water was privatised and companies were free to invest in new reservoirs and sewage systems: they chose not to. They chose not to invest in nuclear, and have only done so with huge state-organised subsidies. In the “Foundations” account, the lack of investment in infrastructure is because the elite and the state have stopped it, through interventions in the market, restricting the building of airports, allowing lengthy public inquiries, restricting where houses may be built, and so on. There is a long tradition in British declinist discourse for blaming the elite for not believing in the very things it does in fact believe in, and for promoting policies which have long been tried and failed. “Foundations” belongs in that very British tradition.
In recent times, a favoured policy of such gurus has been to increase spending on academic science and pursue an industrial strategy based around it, without the slightest hint that this has been the policy pursued for the last 40 years. On the contrary, they claim the elite is hostile to science and to industrial policy; that such a policy not only did not exist, but could not exist. An earlier iteration of this proposal held that the UK had to increase all its R&D spend radically (because it was behind its neighbours on this metric) and support its own inventions with public procurement. These arguments, typical of the 1950s and 1960s, were made at a time when the UK was the largest spender on R&D outside the US and the Soviet Union, and spent huge amounts of public money on British nuclear reactors, aeroplanes, and the like. The problem with these declinist critiques was not simply their failure to recognise reality. Worse, the policy they recommended had been implemented and made the country poorer.
We need to understand that declinists are not proposing good solutions, and that declinism itself is part of the problem, and continues to be. Central to British declinism is bad history, and “Foundations” is no exception here either. As figures of the libertarian right (their alma mater include the Adam Smith Institute, the Centre for Policy Studies and Policy Exchange) its authors cannot bear to imagine that from 1945 it was an active British state that transformed the country’s infrastructure. Instead, they claim “the reforms of the late 1940s, largely under Clement Attlee’s governments, caused Britain to grow more slowly than any other major European country and the US until the mid-1980s”.
They similarly claim that “[i]n the postwar decades, the British state chronically failed to invest in the various companies it had nationalised, succumbing to the permanent temptation of politicians to allocate resources to frontline services (i.e. immediate consumption) rather than investing for the long term”. They don’t appear to know that the UK grew faster in the years between the 1940s and 1970s than before or since. Nor do they want to know that these were years of infrastructural transformation led by the state. This period gave us the motorways, new water systems, the modern railways, transformed the postal, gas and electrical systems, and built huge amounts of housing. Britain’s last coal-fired station (closed last month), all but one of the nuclear stations in operation, the only recently retired InterCity 125 diesel trains – all these date from the postwar years. The country has subsisted by sweating the assets it accumulated before Thatcher.
The authors of “Foundations” refuse to see this even in the cases they discuss. While they correctly note the huge scale of the British nuclear industry in the past – which produced more nuclear electricity in absolute terms than in any other country into the 1970s – they don’t explain that this was the product of state investment. And while they bemoan the lack of nuclear building in recent decades, they cannot see that this was due to privatisation of electricity supply. Privatisation exposed the real economics of nuclear power, long deceitfully concealed by the state.
Another case is housing. Their data on housing completions are presented as proportion of existing stock, not absolute numbers, which downplays the housebuilding of the 1960s compared to the 1930s. In the late 1960s, dwellings constructed in absolute numbers overtook the 1930s peak, with just under half coming from the public sector. Private building has declined only slightly since, except in the very recent past. This collapse in public housebuilding has been central to the current housing shortage.
While the failure of infrastructure investment since Thatcher is clear to the authors, they remain convinced that Thatcher and successors did reverse British decline overall, such that the UK caught up with Western Europe in terms of GPD per capita. But this was a phenomenon of the 1990s and early 2000s, not of the Thatcher era, and one soon reversed. And such figures miss a key point – the gap in labour productivity barely changed at all. There was a Thatcher revolution, visible at many levels, but not in the historical or comparative productivity data. If there was a decline it was not reversed by Thatcherism.
It is telling that, apart from in the 1980s, the other era they celebrate is the interwar years. They claim there was a “housing boom that provided the foundations for the British economic miracle of the 1930s. Millions of extra homes were built in just six years – the fastest period of building ever” (actually more were built per annum in the late 1960s). But they go on to claim, ridiculously, that this “was the key reason we didn’t experience a Great Depression while Germany, the USA, and France did”. The idea the UK didn’t experience a Great Depression is laughable. The 1930s private housing boom followed the Depression, which had led to a radical change in economic policy, with the dumping of the gold standard and ruinously high interest rates to enter into an era of cheap money, as well as the imposition of tariffs. By comparison with the postwar years, incidentally, the performance of the UK economy was pretty poor.
In one important respect, however, the declinism of “Foundations” makes a refreshing change. For, rather than indulging the usual fantasies about the need to innovate to lead the world, it essentially argues that the UK can grow by catching up, by imitating. They have no time for the usual yarns about being or becoming a science superpower: for them what is needed is to recognise British backwardness, and let the market rip to repair the deficit. Doing this would mean, they claim, that “Britain can have rapid economic growth in the near future, swiftly catching up with the world’s most prosperous countries.” This is market fundamentalism pur et dur.
The message of the pamphlet has resonated with Conservatives, as would surprise no one. But, even in advance of publication, it seems Labour too has imbibed the pamphlet’s fundamental ideas. Last December, in an article in the Sunday Telegraph, Keir Starmer claimed, “Margaret Thatcher sought to drag Britain out of its stupor by setting loose our natural entrepreneurialism.” This is doubly false, in that under Thatcher and her successors the British economy grew more slowly, not faster, investment declined and, far from flourishing, British entrepreneurialism probably weakened as overseas capital took over key industries.
Labour’s current economic strategy, like the Tories, targets undifferentiated growth. But Starmer has promised not more state investment, which is already projected to fall, but rather the exact relaxing of planning controls that our authors recommend. That, and foreign investment attracted by financial stability, is Labour’s growth strategy. What this means is that Labour no longer believes in its historic achievements, nor does it believe there is any alternative to the policies of the Tory think tanks, and indeed the Tory governments of the past 14 years. Even when it does wish to intervene, as in the case of climate change (an issue notably absent from “Foundations”), Starmer’s market fundamentalist dad-dancing too often merely replicates Tory policies – for example its recently announced subsidies for such dubious projects as carbon capture and storage and hydrogen.
The right has successfully destroyed the Labour Party’s capacity to represent an alternative. Rachel Reeves’ Budget at the end of October looks like it will only confirm this fact. Labour’s key attack line against the Tories is that they were incompetent. In fact, the Conservatives have been extraordinarily successful at delivering policies, such as cutting back the public sector and pursuing Brexit, which Labour has adopted. They have made Labour incapable of even thinking differently. That is power.
[See also: Sue Gray fell foul of Keir Starmer’s ruthless streak]
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