speri.comment: the political economy blog

Global Races

It’s right to focus attention on Britain’s position in the global political economy, but we need a more sophisticated way of thinking about this issue than the notion of a race

Professor Tony Payne, Director of SPERI

Tony Payne

Tony Payne

Global races have become a new focus of economic and political debate in Britain this autumn.  David Cameron was first into the field, launching his notion of the ‘global race’ in his 2012 leader’s speech to the Conservative party conference.  But he didn’t at this early stage explain it very fully at all. Essentially, the existence of a new global race confronted Britain with ‘an hour of reckoning’.   The options were: ‘Sink or swim.  Do or decline’. The remedy was ‘not complicated’.   It was ‘hard work.’

The phrase was subsequently dropped into just about every formal public statement Cameron made over the next year, always explained in the briefest of terms and never with any serious conceptual development of what he really meant.  Andy Beckett has recently satirised this very nicely in The Guardian by examining closely this flurry of official usage.  Britain needs to ‘win’ the race, or ‘succeed’ in it, or ‘be strong’ in it.  If it can’t or won’t, it will ‘lose’, ‘fall behind’, be ‘left in the slow lane’.  The rising countries of Asia and Latin America will ‘take over’.  As for the prize to be gained from doing better in the global race?  The answer, variously, was: ‘jobs’, ‘wealth’, ‘growth’, ‘trade’, ‘influence’, ‘recovery’ and so on.

It’s easy to mock.  But the issue raised is serious and important and it’s likely that Cameron’s main political need was being served, in that the goal of advancing Britain’s position in this global race arguably gave new purpose to Cameron’s governing project.

It certainly pushed the leader of the Labour party, Ed Miliband, to respond.  In his leader’s speech at the end of this September he deftly characterised Cameron’s proposition as requiring ‘a race to the bottom’, dependent on ‘lower wages, worse terms and conditions, fewer rights at work’.  This was something that Britain could not do successfully and in any case should not seek to do.  Instead, however, it should run and win another race: ‘a race to the top which means that other countries will buy our goods, the companies will come and invest here and that will create the wealth and the jobs we need for the future’.

I will stop quoting speeches in a moment, but bear with me for just a little longer, because we do need to look quickly at Cameron’s response.  He was forced (by domestic political competition) to clarify significantly what he understood to be the pressures of external economic competition in the global race.  He in turn made the following very interesting statement to his 2013 party conference in early October:

‘We are in a global race today.  No one owes us a living.  Last week, our ambition to compete in the global race was airily dismissed as a race to the bottom … that it means competing with China on sweatshops and India on low wages.  No – those countries are becoming our customers … we’ve got to compete with California on innovation; Germany on high-end manufacturing; Asia on finance and technology. And here’s something else you need to recognise about this race … All those global companies that employ lots of people – they can set up anywhere in the world’.

So where have we got to and what are we to make of this new debate?   It seems that both main British political leaders are now in agreement, not only on the existence of a global ‘race to the top’, but also on what it means.  In a nutshell, they argue that the country’s economic future depends crucially on successful economic competition with the leading players in different key sectors of the global economy and that the key to winning this race is to attract multinational companies to choose Britain as the base from which to conduct their global operations.

The trouble is, however, that this doesn’t constitute a very accurate or sophisticated way of thinking about how countries need to relate to the global political economy.  Why? First, it is companies, or possibly sectors, that actually do the competing.  In an age of globalisation national economies are essentially rather curious and highly porous collections of enterprises based on their territory.  They don’t ‘compete’ directly amongst themselves. Second, races are supposed to have finishing lines – even marathons – and are generally organised so that the runners run in the same direction.  In the real global economy the reverse is the case: the ‘competition’ never ends; nobody ever wins definitively because new competitors always emerge from somewhere or other; and everybody is moving in different directions and trying different ploys.

A better basis on which political leaders can think about how to lead their countries into the global political economy is the concept of ‘strategic global repositioning’. It may be a bit of a mouthful, but what it implies is that the ‘managers’ of all countries have to think and act strategically about how and where to seek to ‘position’ (and, as necessary, ‘re-position’) their national economies in relation to the development efforts of all other countries.  Amongst other things, this involves deciding which sectors of the economy to give particular support to (industrial policy), what skills the people of the country are most deficient in (education policy) and what mix of openness and protection best sustains nationally located enterprises (trade policy).

In all this policy-making there is a case for being offensive and defensive, according to sector, situation and need.  It is not necessarily sensible just to open up to every incoming form of foreign investment and expect that to do the trick.  What is required is some serious strategic thinking about how to position (in this case) Britain in the global political economy in the light of its history and location, its economic strengths and weaknesses, its assessment of what other countries are seeking to do in their interests, its capacities in the negotiation of global rules of economic conduct, and many, many other factors to boot.

Cameron and Miliband have grasped that Britain exists in a fast-changing, increasingly open and liberal global political economy.  But they and their advisers still need to think through more deeply the implications of this and to find a less crude way of talking about it with the British people than the over-simplistic notion of a global race (of any nature).

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