Searching for a sustainable economic alternative in Britain

The challenge is huge and demands coordinated political action at the European and global levels

Daniel BaileyCraig Berry’s paper at the recent SPERI and IPPR roundtable event on the topic of ‘The British Growth Model: Building a Sustainable Future’ argued that a progressive economic narrative based on the contemporary concerns of the British public was required to usher out the already discredited British growth model.

The concept of a relatively distinct ‘growth model’ which functioned through the periods of office of numerous governments is not one which has gained traction in mainstream political discourse. Yet, if it were to do so, the terminology could be potentially transformative, especially in challenging the existing and distinctly limited economic narrative of ‘Tory competence versus Labour chaos’.

The concept of a dysfunctional and unsustainable growth is important precisely because it posits that the recession can be understood not in terms of Labour profligacy but by reference to a specific approach to producing growth centred upon a deregulated banking sector, escalating levels of private indebtedness and asset bubbles in the South-East of the country. This is the model which is being resuscitated today, further underlining the importance of articulating this understanding of Britain’s economic trajectory and situating the current ‘recovery’ within it.

This terminology will have to be a central component of any alternative economic narrative that is fashioned by an opposition party. Yet the propagation of such an understanding is a double-edged sword for any party of opposition which is unable to offer an alternative model capable of producing and sustaining another wave of economic growth.

This is not to say that constructing a sustainable alternative is a simple task. Far from it! Although this is exactly the task upon which minds should be focused, it is a difficult challenge and is beset by a series of inter-related issues.  Three immediately spring to mind when considering the enormity of such a task.

The first concerns the realisation that in any case economic growth in the post-industrial world has been iteratively slowing down since the 1960s. In the face of ongoing concerns about the inability of technology to drive further productivity gains and pronounced demographic shifts in Western societies, it may well be (to quote Tyler Cowen) that the Western world has ‘picked all the low-hanging fruit’ available to it. As such, this world has perhaps unwittingly entered a period of ‘secular stagnation’ in which periodic bouts of growth are only achieved through injections of liquidity via unsustainable borrowing and the inflation of asset bubbles. This is the point that has also been made very eloquently by Wolfgang Streeck who argues post-industrial societies are already in the grip of the gradual, and apparently ‘inexorable’, decay of ‘late capitalism’ – a fate postponed only by various methods of ‘buying time’ which now stand at the point of exhaustion. Indeed, locating the British growth model within this context allows us to understand both its effectiveness within a specific time period and the intractability of constructing an alternative.

Secondly, these obstacles to constructing and sustaining another wave of growth are supplemented by a further set of ecological constraints. For, if we are to have growth worthy of being deemed ‘sustainable’, we must recognise the severity of the ecological crisis and its relationship to ‘business-as-usual’ economic strategies.  These tend to assume that the biosphere is an inexhaustible sink, capable of absorbing human activity and providing abundant natural resources.  Both assumptions are evidently no longer tolerable.  This cannot but raise further vital issues that need attention when thinking through what a sustainable economic recovery might look like. Indeed, there are some who believe that we should question ad infinitum economic growth itself in order to be able to address ecological risks adequately.  For Gamble (2014: 145):

Acting now to limit the risks which the scientific consensus identifies would be prudent, but it requires actions that at the very least would prevent a resumption of the natural path of economic growth and at worst a fundamental reorientation and reconstruction of industrial societies, outside the bounds of any conceivable democratic politics. If action is not taken the result may be a catastrophe for the whole human species, because tipping points may be passed, which precludes recovery to where we were before.

The third set of concerns that it is necessary to contemplate when thinking through a sustainable economic alternative to the current British growth model relate to exogenous threats. The fact that the epicentres of the 2008 financial crash were located in the heartlands of Anglo-liberal capitalism – London and New York – may seduce us into believing that engendering more harmonious internal dynamics for the domestic economy based on a discrete selection of industrial sectors – which in itself would add up to a fairly intimidating economic agenda – would be sufficient to ensure a sustainable economic recovery.  But recent events should make us cognisant of the fact that the next recession may well be triggered by exogenous, rather than endogenous events. The looming prospect of financial bubbles exploding and causing a credit crunch in China – to which the British economy is particularly exposed, according to a recent warning by IMF officials quoted in the Financial Times – could constitute the origins of the next crash. Indeed, any economic set-back in China could put Britain’s recovery (if that’s what this is) at risk.  In short, what this means is that, if Britain is to build for itself a genuinely sustainable economic model (in the other enduring sense of that word) it will need to consider ways of insulating its political economy from exogenous threats just as much as reorganising the dynamics of its internal operation.

This is a profoundly intractable set of challenges to address and formulating transformative political action in these circumstances is an enormous task. A good starting point here may be to begin by contemplating the most optimal spatial scales through which political action is to be formulated.  No nation-state, or indeed national political party, is capable of managing these risks or building an alternative political economy on its own.  It’s absolutely crucial to acknowledge – particularly with a referendum on EU membership on the horizon in Britain – that such challenges demand coordinated political action at the European and global levels. Fashioning a truly sustainable alternative model of economic prosperity – whatever that looks like – may rest upon such a realisation taking hold.