The pathologies characterising Britain’s emergence as the first ‘early developer’ may have accumulated to the point where they undermine its prospect of continuing development

What is Britain, and where does its political economy find itself today? It is conventionally, and often utterly unthinkingly, treated as a ‘developed’ country, with all the trappings such a history and status supposedly imply. Yet this is problematic. To be developed is a static – and highly complacent – notion that implies the completion of a process, whereas the global political economy (GPE) in which contemporary Britain unavoidably has to operate as one of many ‘national’ political economies is increasingly fluid and dynamic. It’s obvious that many countries are rising within the framework of the new GPE, which suggests that some must be declining, whether relatively or absolutely.

A different way of thinking is perhaps that Britain is actually at the end of a long cycle – of four hundred years or more – of capitalist development, with its pronounced post-imperial decline, first visible to others, if not necessarily its own economic and political elite, around half a century ago, now playing out fully. The pathologies that accompanied and have come to characterise its distinctive experience – which at one time facilitated industrial development and maintained it beyond formal colonialism in a context of lingering imperial power and a benign, Western-led, globalising international order – may now have accumulated to the point that they do not equip it adequately for the rigours of today’s ‘global race’. Indeed, they may even actively undermine Britain’s prospect of continuing development.

If this is true, Britain could again be first, albeit in a league table not of its choice! It could be the first of the ‘early developers’ to be forced to grapple with the implications of sustained ‘undevelopment’. This is defined here straightforwardly as the dismantling, rather than the building, of a viable, functioning political economy that satisfactorily serves its people. Moreover, it would be doing so in a context where many other countries are growing faster, becoming richer and thereby decisively restructuring the distribution of power in the GPE. In other words, Britain arguably needs new answers to all of the classical questions of development at the exact moment when they are most difficult both to envisage and implement.

There is, sadly, plenty of evidence to sustain such a claim. On many measures, including low rates of investment, stagnant productivity, patterns of poverty and inequality, falling life expectancy, static social mobility, access to public services, pension provision, quality of housing and homelessness, public/private debt and a widening current account deficit, ability to levy tax from a wide base, atrophying transport and other infrastructure and, of course, bloody potholes everywhere (even on major motorways), Britain markedly ‘outperforms’ its ‘developed’ peers. It does, at present, have very low unemployment, but this dubious success reflects only its ability to generate large numbers of badly-paid, precarious jobs in a poorly-regulated labour market in which millions of often-underemployed people are trapped by in-work poverty and dependence on foodbanks.

The reality is that Britain has experienced the slowest recovery from recession on record, with growth remaining stubbornly below its pre-financial crisis trend. It will take almost two decades – effectively an entire generation – for real wages to return to where they were in 2007. This has all been compounded by austerity, which further intensified the litany of pathologies outlined above, and the folly of Brexit, an act of staggering complacency when viewed against the longue durée of Britain’s development history. For, after spending years telling people that taxes on the wealthy could not rise lest they depart, the Conservative government has pursued a form of Brexit in full knowledge that it will encourage businesses to leave and actively reduce growth, all the while remaining blithely unconcerned about the ever-growing cost (already in the tens of billions of pounds) of foregone taxes and preparations for the coming dislocation. The cumulative effect of this will be a long-term disaster, making us all ‘persistently poorer’.

Even in the context of environmental threat, economic growth remains precious. As Paul Krugman put it after calculating that Britain is facing a loss of approximately 2% of its real income: ‘2 percent is a lot! It’s very, very hard to come up with policies that will make a country 2 percent richer in perpetuity’. In effect, we have moved from a position where devising policies to generate very small improvements in the national growth rate was once not just a sine qua non of economic statecraft but its overriding objective, to one where we seem happy to throw growth opportunities and revenue away like a drunken gambler who has gone all-in and chucked the house keys on the table.

So what is going on? Austerity and Brexit are unquestionably key parts of the story and constitute David Cameron’s distinctive historical contribution to Britain’s national well-being. But, as we argue here, Britain’s problems actually run far deeper than just these self-inflicted policy errors.

Craig Berry has also starkly described a Britain that is facing nothing less than a ‘development trap’ in which it is undergoing an accelerated process of ‘migration to the outer core of the global political economy’. This is not a new phenomenon, he adds, since ‘parts of the country are already firmly peripheral’. Until recently, many could not imagine such an analysis being made of Britain: the language of ‘cores’ and ‘peripheries’ is traditionally associated with ‘developing countries’ and it jars with the comforting, familiar myths many still like to tell about our national pre-eminence. Yet its day-to-day consequences were recently and vividly set out in the recent report by Philip Alston, United Nations Special Rapporteur on extreme poverty and human rights, the reaction to which served also to reveal the anger felt by many commentators and politicians at jumped-up professors-turned-UN envoys shining a critical light on our purportedly great country in the way that our elites have so often done to others.

Such reactions are a dangerous diversion, for the truth is that we need urgently to face up to the situation that confronts our country. Britain is ‘undeveloping’; it is falling down the development ladder; it is declining, both relatively and absolutely. The point can be expressed in different words, but it doesn’t get better whichever way it is put.

Needless to say, this presents the thorniest of intellectual and practical challenges. We have long known how development starts: in the West it was generally driven by a post-feudal transition in which increasingly rational state bureaucracies oversaw industrialisation. But we know little about what might happen when a post-industrial society terminally declines. Will it be all-consuming, like the collapses of earlier eras, such as that of the Roman Empire? Some may think this is too dramatic. We argue, by contrast, that too many people are still far too sanguine regarding the fragile nature of development progress, particularly in a country in the process of upending the kaleidoscope of relationships that have sustained it for half a century. Some people were equally confident about the Soviet Union’s permanence right up until the day it collapsed. Will Britain’s ‘undevelopment crisis’ come suddenly, or will it be a gradual, drawn-out affair? Or can it, even at this late stage, be averted or ameliorated by a re-booting of Britain’s development cycle in positive ways?

A few months ago, we published a series of blogs at SPERI (and these were subsequently turned into a paper) which ‘revisited’ the concept of the ‘developmental state’. The broad conclusions that emerged from this project carry crucial lessons for Britain, if it is to have even a chance of steering away from the major developmental collapse that our argument here prefigures. Part II of this post will draw attention to some of these lessons about the theory and practice of development generally and, in so doing, highlight again some of the profound deficiencies and dilemmas to be found at the heart of the contemporary British political economy.

Read Part II of ‘Is Britain ‘undeveloping’ before our eyes?’