The British economy has been in relative decline since the last quarter of the 19th century, and there has been debate about the sources of that decline since at least the great ‘national efficiency’ debate prompted by the failings revealed by the Boer War. Britain, it seems, is the subject of eternal experiments. In the post-war years there have been two. The first was the post-war settlement, which delivered historically unparalleled prosperity and generous public goods in the form of the welfare state. That settlement floated on the ‘long boom’ (the thirty glorious years) and it sank alongside that long boom in the 1970s. For over thirty years now we have lived through a new experiment, symbolically inaugurated by the victory of Thatcherite Conservatism in 1979, but an era of experimentation which also encompassed the heady years of New Labour domination. That experiment had several well known features. It created ‘flexible’ labour markets; it dismantled the command economy represented by publicly owned industries; it placed a bet on the creation of a ‘branch’ economy in manufacturing in a global division of labour, and on a financial services revolution in London; it prompted an outsourcing revolution which saw numerous public services franchised to private corporations; it created an audit state; and it ushered in a new era of micromanagement by the Whitehall elite.
The starting point of our book is the failure of this latter experiment. The public occasion of failure was the great financial crisis, but the roots lie much deeper. Our book explores four great deficits left by the thirty year experiment:
- A competitiveness deficit: productivity stubbornly lags behind our competitors; the financial services sector has failed to generate employment; and ‘branch’ manufacturing has failed to solve the problem of the trade deficit.
- A sustainability deficit: the post-war settlement delivered generous public goods; we show (for instance in our broadband chapter and in the separate studies of the rail industry carried out in CRESC) that the privatised system isn’t delivering a sustainable infrastructure.
- An accountability deficit: the thirty year experiment was legitimised in the language of accountability, but it has created new worlds of unaccountability – out of control corporate elites, franchises in privatisation and outsourcing shrouded in opaque accounting, constant uncertainty about accountability lines between politicians and service deliverers.
- A competence deficit: the age of experiment has also been a new age of fiasco - outsourcing, PPI, rail privatisation, financial regulation; a hollowed out civil service unable to police the new franchises.
The metaphor of an experiment has an appealing ring: experimentation is, after all, the standard method by which the sciences learn, by testing, refuting or confirming theories. But the British history of experimentation is very different: we show in the book that we live in a state that finds learning from experience very hard. There seem to be three political reasons for this:
‘Hyperpoliticisation’: in a world of extreme micro-management everything is turned into adversarial politics and what in the book we call the ‘antidote fallacy’
The closing of the metropolitan political mind: a drastic narrowing in the social and institutional range of elite recruitment (symbolised by the disappearance of the mass political party and domination of politics by a narrow class of professionals) is part of the problem; an equal problem is the rise, since Thatcherism, of a ‘TINAF’ mentality: There Is No Alternative Framework, and this drastically narrows the range of possible dissent from the official ‘line to take’.
The shrivelling of professional expertise. Thirty years of centralisation and increasingly tight control of professional elites have left (beyond devolved government) shrivelled alternative institutions in civil society - and alternative sources of ideas.
We will develop these themes further over the next three blogs.