Industrial Strategy Redux

Posted in: Basic income, Business and the labour market, Public services, UK politics

Earlier this week, the Commission on Industrial Strategy, established by the Universities of Manchester and Sheffield and chaired by Dame Kate Barker, published its final report. The report’s publication was well timed, coming a few weeks ahead of the Budget and the anticipated publication of the government’s own Industrial Strategy White Paper.

In common with other recent analyses, the commission sets out persistent weaknesses in the British economy that it argues justify a strongly articulated, non-partisan and consistently delivered industrial strategy: poor productivity performance, low rates of business investment, regional imbalances, chronically weak export performance, and poor diffusion of skills, R&D and innovation. This is a familiar and largely indisputable list. Yet the commission refrains from describing these weaknesses as symptoms of a deeper neo-liberal malaise or characteristics of a fundamentally broken British economic model. The commission has positioned its report to appeal to policymakers across the political spectrum and its analytical framework reflects that.

The report also resists a sectoral approach to industrial strategy, preferring a limited number of strategic goals, similar but not identical to the “missions” advocated by academic theorists. Some are generated by long-term societal challenges, such as decarbonisation of the economy or providing health and social care to an ageing population, while others respond to identified economic weakness, such as regional inequalities (which the commission largely prioritises over reducing income and wealth inequalities). The choice is somewhat idiosyncratic.

Perhaps the most eye-catching feature of the report – doubtless a consequence of Diane Coyle’s membership of the commission – is the call for the state to ensure that a Universal Basic Infrastructure is provided in every area as a social minimum offered to all citizens. In broad terms, this infrastructure would be “hard” (rail, bus, broadband) and “soft” (schools, health and care services). The proposal deliberately echoes but subverts the idea of a Universal Basic Income, which has attracted significant political attention in recent years. Infrastructure is more important than income, the report argues, in promoting the capabilities of citizens for economic development while regionally-balanced investment in infrastructure would do more to address exclusion from centres of economic agglomeration and growth than income transfers.

The UBI proposal overlaps with recent calls for Universal Basic Services, another intellectual and political route into debates about securing inclusive citizenship in unequal, open economies like the UK’s. It has some congruence too with the argument for promoting the growth of the “foundational” or “everyday” economy that has been developed in recent years by the Centre for Research on Socio-Cultural Change at the University of Manchester. Here the anchor institutions of the local state – local government, the NHS and so on – are used to underpin sustainable demand in the local economy by paying living wages and using public procurement to keep income circulating locally, in strategic partnership with non-tradeable sectors like retail, hospitality and catering. A Corbynite version of this approach has been pioneered, with some apparent success, in Preston, where procurement budgets have been used to buy locally provided services and farmed food, and where cooperatives and other forms of worker control are being encouraged.

It is noticeable, however, that the commission’s report says relatively little about the low-skilled, low-wage sectors in which millions of British people work. Arguably, Britain cannot address its productivity and inequality problems without industrial strategies for these sectors, which are typically overlooked in favour of the high value-added export sectors. This oversight is not accidental: political economists argue that all governments have an interest in meeting the needs of high value-added sectors, but it takes particular kinds of political coalition to ensure that the needs of low- and semi-skilled workers are addressed. Whereas in Fordist economies the interests of these workers could be aligned with those of skilled workers, in post-industrial service economies these working class coalitions have broken down, often leaving the low-skilled without allies. This is particularly true of majoritarian political systems that have co-evolved with liberal market economies, in which high-skill, professional employment in services has grown alongside low-wage, low-skilled work in the non-tradeable sectors.

In the Nordic countries, the persistence of coordinated economic management, large public-sector employment and PR electoral systems has ensured that the interests of low-skilled workers have been represented in governing coalitions (although in recent years, the rise of anti-immigrant parties has fractured social democratic political strength). In parts of continental Europe, dualism in the labour market has led to a weakening of social protection and labour market regulation for lower-skilled workers in the domestic economy; the core social bloc of the export sector interests is politically predominant, symbolised in grand coalitions (although this too is under stress, as the recent German election showed).

An important question then arises for advocates of industrial strategy in the UK: who will be the political agents of economic transformation, and how can broadly based coalitions that unite the interests of low- and semi-skilled workers with those of middle-class professionals be created? Brexit may provide the critical juncture through which such a coalition can be formed, though the task is a monumental one. The spread of devolution may also provide new openings. It is noteworthy that Wales and Scotland have PR electoral systems and strong traditions of social solidarity, and each is pursuing prototypical industrial strategies with the (still limited) tools at their disposal. And on the same day as the Commission on Industrial Strategy published its report, England’s seven metro-mayors met together for the first time to advocate for increased devolution of skills and fiscal policy. In the more complicated multi-level governance of the UK, new political coalitions may yet emerge.

Posted in: Basic income, Business and the labour market, Public services, UK politics


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