Growth

Arthur Marwick

  • The Wasting of the British Economy by Sidney Pollard
    Croom Helm, 197 pp, £11.95, March 1982, ISBN 0 7099 2019 9
  • The Global 2000 Report to the President: Entering the 21st Century
    Penguin, 766 pp, £7.95, January 1982, ISBN 0 14 022441 6
  • United Kingdom Facts by Richard Rose and Ian McAllister
    Macmillan, 168 pp, £30.00, February 1982, ISBN 0 333 25341 8

For almost the whole of the period since 1945 annual rates of economic growth in Britain ran at 2 to 3 per cent: ‘growth was still faster than at any time in history,’ as Professor Pollard reminds us, and ‘led to a widespread rise in prosperity’. Cheers! However, averaged over the same period, the EEC countries managed 4 to 5 per cent per annum, the Americans, starting higher, 3 to 4 per cent, and the Japanese, starting much lower, 9 to 10 per cent. Thus, ‘measured against what turned out to be possible for others in a competitive, intercommunicating world’, Britain’s record was ‘disappointing to the point of being calamitous’. Groans! Nobody, it seems, writes any more about Britain’s ‘progressive social revolution...peaceful and silent’ – as the great architect of French social security, Pierre La Rocque, described it in 1955. True, the Washington Post’s Bernard Nossiter, writing as recently as 1978, spoke of Britain: A Future that Works, advancing the argument that having wisely preferred a leisurely pace and a high quality of life to the hectic stresses of working hard, Britain was the foremost nation in adapting herself contentedly to the realities of post-industrial civilisation. Good try, one might say, but not really fetching enough to stand against the assertion of his fellow-countryman, Martin J. Wiener, that the central issue for historians of contemporary Britain is that of poor economic performance.

Some have seen the origins in the complacencies engendered, and the conservatism confirmed, in the Second World War: the war’s effect, in Angus Calder’s ringing words, ‘was not to sweep society on to a new course, but to hasten its progress along the old grooves’. Some have placed them as late as the conservative reaction against austerity in the 1950s. Others lay the responsibility at the doors of the second or third-generation industrial leaders of the inter-war years, or take it right back to the 1880s when Britain failed to invest in technical education and technological innovation in the way Germany, allegedly, did. Wiener himself went back further still, arguing that the fatal anti-industrial ethos of the British upper class was actually nurtured in the mid-Victorian period.

In discussing, then, the inadequacy of Britain’s rates of economic growth, there is a question to be answered not only of ‘why?’, but also of ‘when?’. Pollard is unambiguous in his answer: his subtitle is ‘British Economic Policy 1945 to the Present’ and it is quite precisely in economic policy after 1945 (not before) that he finds the errors which have done the damage. Explanations harking back to the 1860s or even earlier he finds ‘bizarre’: they leave ‘one to wonder at the respective quality of the Japanese, the French or even the German entrepreneurs of the mid-19th century that made their successors so efficient 120 years later’. Throughout the late 19th century and the inter-war years ‘British entrepreneurs did what was objectively right for them.’ The long-term historical arguments fall, since ‘the post-war rate was completely out of line with any past rates of growth among all countries in the West. They all describe a sharp “kink”, and it is not easy to see why it should be possible to jump from, say, 1 per cent to 5 per cent, but not from ½ per cent to 4 ½ per cent. In any case, in the lead-in period of the 1930s, not to mention the war years, Britain’s output did better than that of most of the others, and this should surely have had more weight at the post-war take-off point than a growth rate lying further back.’ The argument about the negative effect of the war is disposed of (to Professor Pollard’s satisfaction, at least) by reference to the ‘great strength’ acquired in ‘some of the most promising sectors’ such as vehicles, aircraft and electronics: it was not at all evident in 1945 that the British were bound to fail: on the contrary, ‘they looked hot favourites.’

At what fences, then, did the hot favourite fall? In a very closely argued text which drives on vigorously from point to point, Professor Pollard starts by identifying ‘First Causes’: shortage of productive capacity, and a consistent failure to invest. We then, in seeking to know why investment has been so low, turn to the ‘Causes Behind Causes’. Here, Pollard does allow some reference to wider historical circumstances. Despite his concluding verdict on the general significance of the Second World War, he does note the manner in which for many countries war ‘removed the landmarks’, so that it was easier than in Britain to set high investment rates relative to personal consumption. He also touches on two circumstances much loved by all journalists and textbook writers: the continuing role of sterling as an international currency, and continuing delusions of imperial and great-power grandeur. The balance of payments, the international value of the pound, and a variety of ‘political-military adventures beyond the capacity of the economy’, took precedence over production and productive capacity; hence the Stop-Go policy cycle, which always resulted in investment being cut back. Here Professor Pollard comes to his central and most pungently polemical chapter, ‘The Contempt for Production’. This contempt he sees as a function of the principle ‘of concentrating first and foremost on symbolic figures and quantities, like prices, exchange rates and balances of payment, to the neglect of real quantities, like goods and services produced and traded’. Had the Treasury and other central policy-making bodies but glanced abroad, they might have noticed that what our European competitors did was to get their productive base right and on an upward curve first, so that it was possible for them to have rising real wages, full employment, fairly stable prices and successful exports: but, remarks Pollard, identifying the major villain in his story, ‘it was precisely that base that the selective blindness of the Treasury refused to recognise as of primary significance.’ Yet, while the conclusion of the chapter re-establishes the unique evil of the Treasury (‘The Pontius Pilate Posture’), there are indications that the contempt for production is rather more widely prevalent in British society. There is the British political tradition of fighting over ‘the share-out of the cake rather than considering ways of increasing its size’; there is the refusal of trade-unionists to see wage rises as being in any way dependent on increased productivity; there is (nice one) the evident pride that specialist car-makers took in making their customers wait years for delivery.

An attempt is made to resolve the apparent contradiction in the next chapter, on ‘The Learning Process’. Here the argument is that businessmen and unions have been conditioned into their sluggish and anti-social attitudes because of the damaging blows rained upon them by Treasury stop-go policies. In holding back investment, innovation and enterprise, businessmen ‘not only did what the government expected them to do; they did what the government expressly wanted them to do – even though it may well be that the government was quite ignorant of the long-term consequences of the policies which it forced on the business community and on the productive industry of Britain.’ A long and valuable section seems to confirm all we have always secretly believed about trade-union attitudes and practices, but never dared breathe aloud: they have consistently aimed strikes, not at individual employers, but at the community, and, worse in this context, at productive industry as a whole:

Instead of civilising the labour process, the unions have barbarised it. They have shown that there is now no dependence of one human being on another, and where there are the sick waiting to be healed, and bereaved waiting to have their loved ones buried, motorists risking their lives on icy roads, the British workman will put his boot in to secure some extra percentage on his wages. In a few short years, British trade unions have destroyed the moral basis of trade-unionism built up over generations. They also, perhaps most tragically of all, made a victory of their own Labour Party impossible in 1979.

Here the prose is outrunning the professor. But we are back on solid ground with the insistence that the problem does not lie with alleged trade-union immunities, as implied, for example, in the Tebbit Bill: it is not that abroad the legal or economic powers of unions are more restricted, it is that ‘unlike the British they do not wish to use them in ways damaging to the nation in general and their members in particular.’ Furthermore, the unions are not really to blame for these attitudes. They have learned them in reaction to Treasury policies of cuts and stagnation: ‘It is not the least indictment of Treasury policy that it has converted the potentially positive force of British trade-unionism into an agency that inhibits growth, embitters social relations and brings long-established working-class ideals into disrepute.’

In the wake of these categorical promulgations of the central argument of the book, ‘Alternative Causes’ are dismissed, ‘Permissive Causes’ given passing attention. The first of these ‘permissive causes’ arises from the paradox that while (along with their American counterparts) British economists are the most brilliant in the world, they have been quite the most useless in providing governments with sound advice. Having produced an elegant science in which symbols are all-important, British economists, so Pollard tells us, found anything less than macro-economic ‘steering’ beneath their dignity – such as, for example, the French planification, which ‘turned out to be the first step on the road to France’s miraculous modernisation’; the French plan arose out of concrete answers to concrete questions ‘for which the theories with which British economists are weighed down are of little proven worth’. One might interject here the personal view that the real point is that French civil servants are much better educated than British ones, and thus quite able to spot a nutty economist when they meet one. Pollard does make weaknesses in the Treasury and the Civil Service a second permissive cause, referring to selection processes which have zigzagged between ‘bias towards intellectual ability and bias towards the “right” background of class and upbringing’ – the latter point, though something of a commonplace, could have been given more stress.

Two further permissive causes are dealt with in a couple of pages. In a concession to the Wiener thesis, the weakness in applied science and engineering is recognised as having roots in a historically-determined arts-biased culture but is finally pinned down as ‘an effect of Treasury policies, as well as being a permissive cause of further decline’. The pernicious effects of two-party politics, in which politicians scream at each other over issues which bear little relationship to investment and productivity and divide their activities in office between exaggerated reactions against their predecessors’ policies and preparations for the next election, were well described in Michael Stewart’s The Jekyll and Hyde Years. It is striking how often fugitive wets address their criticisms of Thatcherite economic policies to the prospect of Conservative defeat in the next election, rather than to the damage they are causing to the country and its people. On Budget day, the Times Economics Editor began a major article: ‘Are Britain’s economic problems just part of a wider world recession or are they largely home grown? That question is bound to get evermore pressing as Britain starts moving towards the next election with its economic performance likely to be the key issue.’

Pollard touches on the political system as an ‘outside factor’, but his allegorical aspirations turn in the direction of the visual arts: his incessantly repeated theme is of ‘The Rake’s Progress’, of the precious seed-corn being consumed at every hint of a sterling crisis. Furthermore, he sees Thatcherism, not as a reversal, but as a consummation, of previous policies: ‘Sir Geoffrey Howe has shown that he has the courage of Mr Healey’s convictions.’ Personally, I do not read British economic policy since the war as having been quite as single-mindedly obtuse as Pollard maintains. The weaknesses have been wider and deeper. Rather than continuity, Thatcherism represents a perverse reaction to a misreading of those weaknesses, all touched on, though perhaps not always sufficiently stressed, in Pollard’s bold thesis.

Looking to the future, he finds optimism difficult, though, as all polemicists must, he does offer a faint hope of redemption. How important, anyway, is the future of the British standard of living when the world as a whole faces environmental disaster, overpopulation, and endemic and increasing starvation? Various agencies, national and international, and various individuals, have produced in the last dozen years or so different ‘global models’ of what the world will be like in the next century. It was characteristic of that concern for world problems which, for all its weaknesses, coloured the Carter Administration that in his Environmental Message to the Congress of 23 May 1977, the then President should have called for a study of the ‘probable changes in the world’s population, natural resources and environment through the end of the century’, to serve as ‘the foundation of our longer-term planning’. It is characteristic of the new meanness embodied in the Reagan regime that The Global 2000 Report to the President should now have been deliberately set aside. The report is extremely gloomy. Apart from the better-known facts of increasing population pressure, mainly concentrated within the poorer countries, the developing gap between richer and poorer countries, and the destruction of rain forests and exhaustion of protein and fuel resources, there is a whole range of other more abstruse, yet potentially critical problems concerning climatic change, the adaptability and resilience of parasites, and the specific failure of new crop strains. Referring solely to the parochial British context, Pollard in his introductory chapter expounds the essential importance of growth and the fundamental fallacy in anti-growth arguments:

a fallacy extending beyond morals and value systems to the economic base itself. The rustic idyll may have its attractions, but it could only be enjoyed by a maximum population of around ten million. The British population of 55 million cannot exist without urban concentrations and factories, and these have to be efficient. Cairo is not a suitable ideal for London to aim at.

If growth has led to pollution in the past, it can also, Pollard maintains, remove it in the future. Perfectly valid for Britain, such arguments sound rather slick when applied to the world as a whole. Obviously growth is vital if the desperate living standards of the vast majority are ever to be raised: but already growth has brought the irreversible destruction of vital environmental assets. It seems likely, indeed, that there are natural limits upon the sort of growth that would be needed to give everyone a decent standard of living. Of all the models produced during the Seventies, the least pessimistic was the Latin American World Model – a product of the very natural will, in sections of the Third World, to believe that through economic growth and social engineering the world’s problems can be solved. This model (as summarised in the Global 2000 Report)

allocates labour and capital to maximise life expectancy. It assumes that personal consumption is sacrificed to maintain very high investment rates (25 per cent of GNP per year), and it posits an egalitarian, non-exploitive, wisely-managed world society that avoids pollution, soil depletion, and other forms of environment degradation. Under these assumptions it finds that in little more than one generation basic human needs could be adequately satisfied in Latin America and in Africa. Thereafter, GNP would grow steadily and population growth would begin to stabilise.

But even assuming these ‘near-utopian social conditions’ and high rates of investment, the projections do not work for Asia: there would still be a catastrophic food crisis in Asia beginning by 2010. What the Latin American model suggested was that the Asian food crisis could be avoided through food imports from other areas with more crop land, better crop yields and effective family planning policies. We are not, in effect, only in an arena of natural limitations, and of growth versus pollution: we are also in one where the forces of ideology and religion play havoc. How far it is legitimate to link the parochial with the global may well be in doubt, yet there surely is a common thread between the obscurantism and conservatism of the great world religions, the mindless chauvinism of Ronald Reagan, the obdurate monetarism of Margaret Thatcher, and the empty sloganising and football-fan mentality of British politics in general. Reading Militant, one is less struck by the advocacy of extra-constitutional courses which so exercises Michael Foot than by the ritual incantation of ‘socialism’ as a quasi-religious panacea – something the Labour Party is rather prone to do as well. In Britain we are beset by irrelevant solutions to serious but not unsurmountable problems. In the world, alas, even rational policies may not be enough to overcome problems serious enough in the material sense, and greatly aggravated by ayatollahs, commissars and juntas.

How a rational policy may be determined is in itself far from clear. Each of the books under review presents a very different external appearance: fat (Global2000), flat (Rose and McAllister) and very slim (Pollard); each, however, is loaded with statistical tables. For Rose and McAllister, tables of facts compiled from unimpeachable sources form the essence of their book: ‘We focus attention upon what needs to be explained, a necessary condition of any social science analysis. Too much writing – particularly about nationalism – offers explanations for phenomena that do not exist.’ Pollard’s arguments are illustrated and even bolstered by, but not usually dependent upon, his equally unchallengeable tables. Global 2000 is much more ambitious, since, of course, it is presenting projections into the future. Very properly, there is much discussion of methodology and assumptions. Others of the world models are criticised on this score; it is admitted that with different assumptions (possibly better-founded) the Global 2000 report would be even more pessimistic than it is. It is not easy to engage in argument with Global 2000: but whatever may or may not be its technical imperfections (and we shall not really know till we get to 2000, shall we?), its message of foreboding is surely a correct one. One can argue with Pollard, but again he is surely right on the basic point of failure to invest, whether or not Treasury policy must take the sole blame for that.

With Rose and McAllister there really is little scope for argument. It should be made clear that the authors are concerned solely with those facts which relate to Scotland, Wales and Northern Ireland, England being brought in only occasionally for comparative purposes. Thus, in the global context, the book might be thought to go beyond even parochialism. In the United Kingdom context, it deals with those areas where absence of growth has had devastating effects. Some interesting contrasts are thrown up. Wales has the highest proportion of pupils staying on at school at age 17 (21 per cent), Northern Ireland the least (12.5 per cent), with England (18.5 per cent) and Scotland (16.5 per cent) in the middle. Scotland has by far the highest crime rate, Northern Ireland (when political crimes are excluded) by far the lowest. The overwhelming emphasis is on political facts, and near the beginning it lists ministers and chief civil servants who have held responsibilities in regard to one or other of the three countries.

Pollard concludes with the reflection that attitudes of mind can be affected by argument. The place of his book in academic debate is assured: whether it will influence government policy is less certain. The Global 2000 study was intended as a foundation for long-term planning. It identifies an ‘important priority for the United States’: to ‘co-operate generously and justly with other nations – particularly in the areas of trade, investment and assistance – in seeking solutions to the many problems that extend beyond our national boundaries’. Obviously, it will provide valuable facts and arguments for concerned internationalists everywhere: whether it will affect policy, even under some future administration, is also doubtful. Greatest practical optimism is shown by Rose and McAllister: they confidently invite corrections and suggestions for the second edition of their book.