Current British governments are not prepared to defend or restore our manufacturing capacity. A key step must be to devise an industrial policy for Britain...
In March the manufacturers’ organisation EEF (formerly the Engineering Employers’ Federation) called the first ever national manufacturing conference. Every seat was sold: over 500 delegates attended, accusing the government of having “no compelling vision for where the country is heading”.
Looking at the management of our economy and lack of plans for expansion, the term “government” is a definite misnomer: current British governments are inactive. They are not prepared to defend or restore our manufacturing capacity. Instead of introducing measures to get people back to work and devising industrial strategies to rescue our country from economic depression, they just drift spinelessly and tolerate endless industrial closures.
Failure to act in this sphere has plagued a succession of governments – Labour, Conservative or Coalition. Each party in power has responded negatively to industry, reinforcing capitalism’s absolute decline, as the bourgeois political parties are completely in awe of finance capital with its strong aversion to British industry.
Unemployment is at unprecedented postwar levels (2.67 million), young and older job seekers are being hit disproportionately and the economy remains depressed with recovery nowhere on the horizon. The Institute for Public Policy Research predicts that unemployment is set to rise further and cannot see it falling in the next year and a half.
How is this desperate situation to be changed for the benefit of a people suffering in so many ways? How might capitalism be compelled to adapt?
If manufacturing capitalists can organise and make calls for supportive economic measures, then surely our industrial unions can combine their efforts too, put aside membership battles and conduct a protracted campaign to resurrect British industry.
Ideally, both manufacturing capital and industrial unions should campaign on the question of rebuilding industry and manufacture in the national interest, transform the political environment and isolate the non-interest of finance capital. Indeed, later in March, Cameron felt compelled to speak about rebuilding the infrastructure to the Institution of Civil Engineers, where he was high on rhetoric but thin on practical details.
A key step must be to devise an industrial policy for Britain, similar to those in other countries. An industrial audit of Britain needs to be undertaken, highlighting what has been lost, what needs to be restored and in which order, and what needs to be developed that is new.
The industrial policy must support British industry: there must be an end to defence procurement going to foreign companies, letting the likes of Sheffield Forgemasters go under and dithering over the train-maker Bombardier. Government procurement must direct more manufacturing work to British industry. There will have to be protectionism and industrial intervention. If this brings Britain into conflict with the European Union, then we should behave as Germany and France do and protect our own interests. Cameron offers a National Infrastructure Plan; we shall see if it has teeth and substance.
A bank that invests
Within the industrial policy a British Industrial Investment Bank must be created (as is the practice elsewhere) with the aim of improving the long-term prospects and growth of the British economy, by extending the range of our manufacturing capacity and by improving our nation’s infrastructure facilities for energy, transportation, water supply, education and health.
State-directed, this bank should make funds available at low or negligible levels of interest, lending according to long-term national interests and investing either to build new industries, expand existing companies or update the infrastructure (Cameron made no reference to industrial expansion, only infrastructure renewal). This approach would counteract the contractionary effects of the current obsession with fiscal policy, which is over time proving to be ruinous.
A public development bank would avoid the short-termist tendencies and market failures of private capital markets which result in a lack of funding for projects of long-term value to our national economy.
For instance, sometimes oil and gas industries work on a 25-year project cycle. Unlike a commercial bank, a National Industrial Investment Bank could appraise possible projects for financing not only on the basis of their profitability but also on the basis of their contribution to national policy objectives—say the promotion of exports or the repair and development of infrastructure, etc.
A National Investment Bank could address the deterioration of British infrastructure. Infrastructure is a prime example of a sector in which the benefits of a project to the broader economy are larger than the private financial return to the owner, with the result that private capital markets, left to their own devices, tend to fund less infrastructure investment than is needed for the economy as a whole. Investment in Britain’s transport, energy, water and other systems has fallen to critical levels over the past four decades.
Capitalist economies find it difficult to stage spontaneous recoveries from major slumps because severe economic depression leads to a collapse in confidence and investment. Absurdly, banks and companies nowadays are sitting on piles of cash or stashing them away in relatively riskless, unproductive places.
There will be no means of escape from prolonged depression except through state intervention to promote and subsidise new investment. Expenditures sponsored by government will substitute for the lost confidence of the private sector.
Worryingly, Cameron’s speech was full of caveats about an unwillingness to commit the state to pay all the bills and how it was important to get private money and unlock the dynamism of the market. Back to square one then with the danger of no real movement. The nettle of utilising the state must be grasped.
As for how national investment banks can operate, there is a wealth of successful examples from other capitalist countries such as the Kreditanstalt fur Wiederaufbau in Germany, the Korea Development Bank and the Development Bank of Japan in Asia.
An interventionist approach organised by companies on an industry basis has worked for Britain’s automotive sector. The car industry – once in a sorry state –established The Automotive Council to generate stronger supply chains, provide high level skills and apprentices, make the sector more attractive for investment and provide genuine collaboration. Now the sector has 3,000 companies employing 133,000 people, making a range of cars and buses.
Other sectors such as aerospace and the Marine Leaders Council have shown the model works elsewhere. This is despite government; imagine what could be achieved if industry was supported by state policies and investment strategies.
We need to set in train a series of measures that will produce a second industrial revolution in this country and put people back to work making a range of things that people and society need. ■