At times down, but never out

Understanding Decline
May 22, 1998

This collection is about the United Kingdom's diversity, expansion and resilience. The main lines of inquiry are economic: that the UK has not been doing so badly, although UK government and industry ought to have done more to raise the long-run rate of growth, given available resources and information. The focus on decline concerns the management and mix of growth and the adaptability of UK plc over the two centuries since the onset of the industrial revolution. All of the chapters avoid an arid discussion of absolute and relative decline and hit seasoned notes about how to think about the place of the UK in the economic world.

There is also a key subtext: political decline, and how ineptly, and usually late in the day, the politicians caught on to the real position of the UK. Although the authors are more cautious and polite than in many collections on the market, they imply the obvious point, that however much politicians bleat on about Britain's world role - "punching above our weight" and so on, the fact is the UK is only an advanced, but middle-weight, economic power - it does not have the clout in the world it once had (a very long time ago).

While contributors find contrasting ways to tackle decline, their common intellectual inheritance enables them to develop a most interesting set of ideas that could be described as a British model of success. Most agree that it is over the long term that Britain, a complicated mixture, has been able to generate sufficient internal adaptability to overcome very real obstacles, whether of ignorance among the governing elite, obstruction of reforms by vested interests (usually in and near the Conservative Party), wilful blocking of progress in industrial circles or some really determined efforts by some governments to reverse the clock. Thus, in spite of all the wars and military side-shows, all the fantasies of empire, Britain has still remained near the top of the middle-weight countries of the western world.

The idea of British success may be more acceptable to the sceptical Brits given the slough of despond that has settled over Japan and the Asian "tigers". There are also convincing non-starters in the long-term development stakes from any Middle Eastern or African models, and precious little to inspire in Latin America. This leaves Northwest Europe, Scandinavia, North America and offshoots in Australia and New Zealand. In the two centuries since the British industrial revolution first made domestic industrial growth an essential basis for political power, Britain remains in this favoured category.

In sum, the British mixture enabled growth to continue at about 2 to 3 per cent per year for two centuries, and as Charles Feinstein describes in a fine essay, to withdraw from empire and achieve, from 1951 to 1973, a "remarkable phase of successful economic performance, the best ever achieved in more than two centuries". Real gross domestic product grew at 3 per cent, with the productivity of labour higher still. During this time there was an increase in the volume of UK exports of 4 per cent a year, and there was a rate of investment of about 20 per cent of GDP a year, or double the previous level. On several other indicators the UK also scored especially well: on full employment, "no healthy worker who wished to have a job was unable to find one", and there was no serious inflation. Several contributors echo these lines; indeed, a cursory look at the social audit of Britain would notice the achievement of a more humane workplace (though very much to do with trade union action), the improving position of women, the serious agenda of improved housing and services (though this achieved mixed results) and a cultural shift that markedly downgraded the empire and upgraded Europe in line with a shift in exports. The optimistic view is expressed clearly by Barry Supple, to whom these essays are presented, and more stridently by David Cannadine: "Britons today enjoy a standard of living of which their late-Victorian forebears could scarcely have dreamedI For the majority of the population, life has been getting, and is still getting, better and better and better." The age of decline has been "an age of affluence".

The essayists agree that if we are to fathom this redefined economic decline, we have to understand two centuries of economic history; to grasp that in the long term what may operate as positive in one era may not do so in another and that bringing to bear modern concepts may narrow appreciation of change. There is some very sharp thinking on these issues by Patrick O'Brien. In the prewar era several historians, notably T. S. Ashton, brushed aside older work on the significance of political contexts. Thus the understanding of British power came to be underspecified; and this underspecification has continued. It has to be challenged, right through from the early stages of industrialisation. O'Brien attacks the simplistic models of the "multifaceted connections of growth and trade" and the foreshortening of the timescale of industrialisation. Moreover, some of these model-builders were driven by a need to minimise government. One target was foreign trade; if the foreign trades could be seen as only a minor contributor to industrialisation, the huge expenditure of the state could be described as wasteful. O'Brien tackles this head on when he challenges the cliometricans to suggest why "a polite but 'commercially aggressive' people failed to adopt their prescriptions between 1688 and 1815", ie when this British mixture was brewing up the new concepts of industrial revolution and fast economic growth; he adds that "they might also care to suggest how rival European powers might have responded to a unilateral declaration of free trade and withdrawal from colonisation by the Hanoverian state". The integration of political with economic history runs through this book, and gives it much of its strength.

Most chapters return to general debate issues that all too often have languished on the sidelines. Thus the collection edges aside simple models of growth and technological change. Simon Szreter offers a vigorous discussion of the role of the "full panoply of social institutions that develop human resources". Nurturing institutions are not "some form of utopian or 'socialist' luxury, but a crucial ingredient for the perpetuation of the highest rates of free-market-based economic growth". Szreter raises interesting queries as to the necessity of a "national commitment to as thorough and effective an investment in all dimensions of the national capital". This is the Tony Blair project, and investment in education and human potential, the contributors seem agreed, is essential to raise GDP. Szreter mentions the flaws in the Tories' post-1979 project and why it did not deliver the anticipated improvements in economic performance. He cites the deplorable teacher-to-pupil ratios in the public-sector schools, static at 1:19 over 15 years to 1995, compared with 1:10 for private schools, which improved their performance in this period.

Perhaps the most telling figures are for the proportion of the population on whom the crises of the Tory growth model inflicted most damage. Szreter again: "Whereas in 1979 the poorest 20 per cent of households had 10 per cent of the nation's disposable income, and the wealthiest had 35 per cent, by 1990-91" the proportions were 6 per cent and 43 per cent. Rowntree-sponsored research has shown that one in six of the population experienced an actual fall in real disposable income and that by 1989, 12 million lived in households with less than half the average income, compared with only five million in 1979. This is not just a read-off from economic crisis, though that had its impact on the suffering. There was also a political agenda, a redistributive one, and very effective it was too. But it was a diversion from the gradual, improving education and health policies of pre-1979, and by implication this is where we should now return to.

Two essays - on John Maynard Keynes, William Beveridge and the financial discussions of wartime - may seem tangential to the idea of decline. Yet given the crucial role of ideas in forming political agendas, they should be read widely. In the 1980s a variety of academics and political think-tanks blamed the social security budget for the persistence of inflation, the decline in the pound, low investment, the erosion of work incentives, single mums, and so on, singling out Keynes and Beveridge as villains, who made all sorts of basic financial errors in their efforts to dragoon the country into a new Jerusalem of public expenditure on health and welfare that we could ill afford. As an essay in correcting these errors, Peter Clarke's defence of Keynes is quite exceptional, citing chapter and verse as to what was actually written at the time and making many corrections to more popular accounts. Likewise, Jose Harris's essay on Beveridge brings out much material that is basic to the interaction of these two policymakers. I will recommend both chapters to graduates embarking on archive projects.

By way of testing some of the ideas on the connection between education and a subsequent rise in GDP, I pushed them over to my special subject class (all three of them); while they evinced all the polite bonhomie one expects of the elite, I detected a slight frisson at the idea that the long-run increase of GDP could be achieved by doubling the numbers in further and higher education for little or no increase in overall resources. There was less tolerance of "swamping us" in a sub-honours class who were appalled at the idea of a class of 12, and to whom the arrival of natives from Dundee and Kirkcaldy was seen as a real threat, not least to their social life.

This book is valuable. It is well-written, well-organised, and there are many ideas that will appeal to a wide range of academics. As various changes are in train for higher education and welfare, changing the post-1979 agenda, the overall debate needs the kind of serious thought found in these contributions. The government could do with inviting some of these authors to bring their historically based, essentially humanist perspective to bear on policy discussions.

Richard Saville is lecturer in economic history, St Andrews University.

Understanding Decline: Perceptions and Realities of British Economic Performance

Editor - Peter Clarke and Clive Trebilcock
ISBN - 0 521 56317 8
Publisher - Cambridge University Press
Price - £40.00
Pages - 313

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