QUOTE OF THE MONTH

‘Three final considerations remain. The first concerns the general tendency for leading industrial countries to find themselves obliged, as other, low-wage areas begin to compete with them, to shift the weight of their operations within the international division of labour, away from industry first to commerce and ultimately to finance. The Dutch in their golden age, and before them possibly the Italian cities, might furnish earlier examples of this sequence. Might it then have been correct, even if not chosen deliberately but by a kind of unconscious collective drive, to neglect the declining manufacturing sector in favour of the sectors of the future, commerce and finance? Voices were not lacking, then as well as among those who are presiding over the far more devastating period of decline of British manufacturing in the 1980s, to claim just such a prospect.

However, the argument remains just as unconvincing in the context of the Victorian and Edwardian as in that of the second Elizabethan age. First, it is clear that the favours extended by the Government to the financial/commercial sector were not due to the recognition of the new, but to the survival of the old. The City, as we have seen, had gained its initial foothold in the centres of power in the seventeenth and eighteenth centuries, and had kept it ever since, not so much by the economic significance of its contribution, but by the kind of social, familial and political links and by the snobbery with which the British ruling elite traditionally recruited itself. Next, a successful high-wage economy might well sustain itself by a shrinking manufacturing base and a growing tertiary sector, but only if the manufacturing sector which survives, remains technically up-to-date and able to sustain the high incomes consistent with the incomes realized in the financial sector and with the expectations of an advanced country.

It cannot be achieved by the kind of governmental neglect of industry characteristic for our period. Furthermore, such modest attention as was claimed by and granted to industry by the British Government, tended to be given to the old staples. The new high-tech, growing industries on which future development should have rested were, as noted above, treated with particular lack of understanding and helpfulness.

Thirdly, the argument for a major switch to the services neglects the enormous social costs of transferring half the British population from its north-western, formerly industrial base, to a new geographical and occupational environment. At least one generation would remain immobile among the kind of dereliction which is visible in northern Britain today, even if the following generation might possibly be willing and able to move. And lastly, the argument overestimates the employment possibilities of the tertiary sector, even if we make the totally unrealistic assumption that Britain, having failed to modernize her industries, retained a world monopoly of invisible exports. It might, conceivably, be a solution for a small country like Singapore or Switzerland, though even that is doubtful; it is certainly not conceivable for the 50 millions who have to be maintained in the British Isles.’

Sidney Pollard, Professor of Economic History, writing in 1989 about the British economy 1870-1914.