national capitalism

National Capitalism

Far from leading in the race for higher productivity, Britain in these last years has been outpaced by almost every other industrial nation.
Britain Belongs to You: The Labour Party’s Policy for Consideration by the British People, 1959 Labour Party manifesto
A New Britain – mobilising the resources of technology under a national plan; harnessing our national wealth in brains, our genius for scientific invention and medical discovery; reversing the decline of the thirteen wasted years; affording a new opportunity to equal, and if possible surpass, the roaring progress of other western powers while Tory Britain has moved sideways, backwards but seldom forward.
The New Britain, 1964 Labour Party manifesto
We are the people who, among other things, invented the computer, refrigerator, electric motor, stethoscope, rayon, steam turbine, stainless steel, the tank, television, penicillin, radar, jet engine, hovercraft, float glass and carbon fibres. Oh, and the best half of Concorde.
Margaret Thatcher, first speech to Conservative Party Conference as leader, 19751
It is too easily assumed that the United Kingdom was at its most industrial in the distant past, when it was the workshop of the world in, say, the 1850s. The economic statistics tell a different story. It was in the 1950s and 1960s that the United Kingdom was most focused on industry, and on manufacturing industry in particular. If it was the workshop of the world in the nineteenth century, the nation itself was most like a workshop in the 1950s and 1960s. The share of manufacturing workers in total employment peaked in the 1950s, the absolute number of workers in manufacturing in the 1960s. This was British manufacturing’s moment; the moment too of the industrial working class. This was the time of the fastest ever British economic growth, putting the industrial revolutions, both first and second, to shame.
The nationalization of the post-war economy and the great emphasis on production in this national context appears to support the argument that economic nationalism and production went together, a suggestion which has been central to critiques of the British economy. Yet to the extent it supports the abstract proposition, it undermines the analysis of the British case it is used to support. For even when the British economy was liberal, it was the most production-intensive in the world. If nationalization of the economy promoted productivism, that started from a uniquely high base. More important still, the very fact the economy nationalized and became even more production-oriented undermines the argument usually applied to the British case. That was that because British capitalism was so global, there was no British national economy and no strong national industrial capitalism. In reality, then, post-war economic nationalism merely reinforced an existing orientation to industrial production, making it a doubly strong bit of evidence against the thesis that global capitalism undermined national industry.
The British national economy stood out as the most manufacturing-intensive economy in the world in the 1950s, barring only Germany. In terms of proportion of output represented by manufacturing it was 37 per cent in 1950 and 36 per cent in 1960, declining slowly to 29 per cent in 1975. If calculated in constant prices, to take account of the relative fall in manufactures’ prices compared to prices in general, then the proportion (in 1963 prices) remained essentially constant at 30 per cent between 1950 and 1975.2 By one measure from 1948 into the early 1970s manufacturing expanded more than services in output (see table 12.2). It was the policy of governments to push manufacturing. For example, the selective employment tax of the 1960s was designed to discourage employment in industries other than manufacturing.
Manufacturing, which, rather tellingly, began to stand for the economy as a whole, was a national enterprise to be encouraged by national and nationalist policy – protection, support for investment, discriminatory taxes and nationalistic procurement. Although manufacturing industry was, unlike the utilities and mining, not nationalized, it makes sense to think of it as a national capitalism in contrast to the global capitalism of the first half of the century. In the 1970s, in an era of crisis for manufacturing, many of the great names of British manufacturing were in fact nationalized in a last-ditch attempt to save them.
Manufacturing was regarded as particularly important not only because its products were exportable, but because it was seen as the place where the gains in labour productivity were to be made. In the 1950s, British manufactured exports accounted for 10 per cent of GDP, and the United Kingdom had more than one-quarter of the world’s manufacturing exports; only just behind the US, and well ahead of everyone else. However, the fall in the United Kingdom share in world exports of manufactures was a notable feature of the period. It was down to 14 per cent in 1965 as other countries either returned to or entered the world market for manufactures.3 Furthermore, the share of exports in GDP fell, as we have seen, into the late 1960s. As we have also seen, exports of manufactures and imports of all kinds of goods roughly balanced through to the 1970s. Within these totals were significant changes, as the United Kingdom became a significant importer of manufactured goods. From the early 1980s the United Kingdom imported more manufactures than it exported. In the manufacturing-focused picture of the economy this was a calamity, and a central bit of evidence for the notion of a serious British economic decline. Not only had the United Kingdom lost its seemingly rightful share of the world market, it had lost much of its home market too.
A different analysis is needed. The main determinant of manufacturing export shares was what happened not in the United Kingdom, but in other countries. It was perfectly possible to be succeeding in promoting manufacturing, and indeed manufacturing exports, and to lose market share at an expanding world level. Secondly, the move to becoming a net importer of manufactures was the mirror-image of the fact that the United Kingdom no longer needed to import food or energy on a large scale. The basic relations of the economy to the rest of the world had changed, in ways in which the manufacturing-oriented fables did not grasp. Furthermore, while the net trade in manufactures became negative, exports of manufactures continued to increase. Essentially the economy was becoming more open, another way in which the characteristic notions of the 1950s and 1960s no longer applied. The very structures of specifically national capitalism were by then coming apart.
The economic benchmark in the 1950s and 1960s in terms of income per head was the USA. It was roughly twice as productive per capita. In terms of rates of growth the standard was not set by the USA but by France, Germany, Italy and Japan. They grew faster than the UK, but from a lower base of income per head. The fundamental process was that of convergence – with the poorer of these economies growing faster than the richer ones. Slow growth was for a country like the United Kingdom a sign not of backwardness, but of wealth.
BRITISH BUSINESS
In the 1950s and 1960s the United Kingdom had capitalist businesses, some of the very largest and most successful in the world. The important British firms were national, headquartered in London, produced largely within the United Kingdom and were closely connected to government. They were also close to finance, through interlocking directorships as well as financial relations. The term ‘finance capital’ did not necessarily mean banks, but rather the union of business and finance.4 ‘The City’ did not mean finance as opposed to industry, but the centre of all British business, including the industrial groups. Only very much later would an overwhelmingly financial City take over.
The 1950s saw the return of the high place of the businessman in public esteem. In the 1950s the boss, the industrialist or banker, was becoming something of a hero. He, for this was an almost exclusively masculine domain, was more of a manager than a capitalist, an employee with an expense account rather than a capitalist or simply a rich man. More generally, ‘With business so prosperous and prestigeful, the upper classes have naturally moved into its command positions.’5 The public schools were training future businessmen. Indeed, in the 1950s politicians and some professionals with political or government experience were going on to run businesses. As one critic put it:
As a Professor of Moral Philosophy, Sir Oliver Franks [who had served as a very senior civil servant and diplomat] may have been a man of some influence; as the Chairman of Lloyd’s Bank, he is a man of power. As the leading barrister of the day, Sir Hartley Shawcross [a former Attorney General] may have been on the fringe of the power elite; as a member of the board of Shell and Ford’s, he is right in it.6
Powerful and respected politicians such as Walter Monckton (Midland Bank) and Oliver Lyttelton (Lord Chandos, who went to Associated Electrical Industries) also went into business, or bigger business than they had come from.
It was notable that the industrialists elevated to the peerage in these years were managers rather than owners and, also in contrast to earlier years, generally had not first been in the House of Commons. They included Ernest Hives of Rolls-Royce, Clive Baillieu of Dunlop Rubber, Peter Bennett of Lucas (who had been an MP), men from Shell and BP, three from ICI, as well as from Pilkington, British Leyland, Courtaulds, Rootes, English Electric, BICC, the Rank Organisation, Sainsbury, Marks and Spencer and Great Universal Stores.7 From the 1970s onwards fewer industrialists went to the Lords, as the new peerage was dominated by professional politicians, with the proportion of senior serving officers, as well as businessmen, diminishing. Lord Weinstock of GEC, Lord Tombs of Rolls-Royce and a few others, and one nationalized industry head, Lord Marshall, were the exceptions.
At local level, and through representation in the House of Commons, there was a profound diminution of business influence from the 1940s onwards. The bourgeois cities became cities without a bourgeoisie, only a service middle class; they had factories but few head offices; they were no longer centres of opinion or elites connected to national power. Local banks, stock exchanges and commodity exchanges disappeared.8 Capitalist concentration, and nationalization, had denuded the industrial cities of their active, local haute bourgeoisie. Whereas in 1914 it made perfect sense to think of a Manchester bourgeoisie, and still to an extent in the interwar years, by the 1960s things were different. The Manchester Guardian became the London Guardian, and Manchester, like other cities, lost most or all of its Conservative MPs and councillors. Liverpool lost its last important shipping firm in the 1960s.9 The case of Newcastle was studied by a community history project in the 1970s, which showed how local coal families such as the Peases and shipbuilders such as the Wigham-Richardsons no longer commanded local enterprises, though they might retain country houses in their region.10 Of course, there were exceptions. Ronald Colville, 2nd Baron Clydesmuir, joined the family steel works in Scotland in 1945, becoming a director in 1958. He was also a senior Scottish banker, rising to become governor of the Bank of Scotland and a director of Barclays. He held important honorary royal and military posts in Scotland. Sebastian de Ferranti, managing director and later chairman of Ferranti, took cultural posts in Manchester in, for example, the Halle Society. His brother was a director of Ferranti and Tory MP for a northwest seat 1958–64. Such links, though once common, were now exceptional.
But the Ferrantis and Colvilles were deeply dependent on other sorts of relations with the state. Ferranti depended on state purchases of everything from computers to guided missiles. Colville, Scotland’s main steel maker, was subject to the direct and indirect influence of the state. Steel was nationalized in 1951 and mostly quickly privatized. It was nationalized again in 1967. Whether public or private, the state was involved in a transformation through which by 1970 steel output was twice as great as in 1940. The expansion and renewal came in phases. The late 1940s and early 1950s saw a new Dorman Long plant at Lackenby. The Steel Company of Wales built the Abbey Works at Port Talbot 1947–53, which became the largest steel works in Europe, with a new strip mill. In the late 1950s it fell to Harold Macmillan as prime minister to give one plant to Wales and the other to Scotland – critics argued that a single plant in Wales would have been better. The Scottish plant was for Colvilles at Ravenscraig, to which a strip mill was added from 1959. The Welsh plant was built at Llanwern by Richard Thomas and Baldwin Ltd. Generally there is no evidence for technical backwardness. The Llanwern hot strip mill pioneered the first successful use of a computer for complete mill control. The United Steel Companies developed ‘management cybernetics’.11 British steel companies were as fast as those elsewhere in introducing new steel-making processes too.12
Industry saw itself as national, sometimes even still imperial. Imperial Chemical Industries, the greatest chemical company, was never nationalized, but in 1955 a company book for employees and shareholders sought to explain ‘in what manner it discharges its responsibilities to Great Britain and the British Commonwealth of Nations’.13 It was, the book stated, a company ‘essential to the life of the nation’.14 The new plant at Wilton, it intoned, ‘was being developed into one of the world’s greatest and most modern centres of chemical manufacture’.15 Wilton ran on petroleum, imported raw material, but it produced mostly polythene, polypropylene and Terylene, boasting two plants which were the largest in the world, connected by pipeline under the Tees to Billingham. Polythene and Terylene were British discoveries from the 1930s, one made by ICI, the other taken up by ICI from the Calico Printers’ Association. By 1970 Wilton had 14,900 workers.16 Petroleum chemicals, including refining, Wilton included, were ‘perhaps the most successful British example of import substitution in an infant industry protected by quantitative import restriction’.17
ICI was also national in that its single largest customer was British agriculture – it was a huge maker of fertilizer especially. The works at Billingham were the centre of a range of ammonia and nitrate factories run by ICI. Billingham also made sulphuric acid and expanded production in the early 1950s from local anhydride (in a notable import-substituting initiative). Billingham, once the great hope for coal-powered British national modernity, changed over to oil in the late 1950s and early 1960s and from the late 1960s to British natural gas.
NATIONAL SUBSTITUTES
Manufacturing was there to supply national needs, and to export in order to obtain imports. Far less well known was the development of manufacturing capacity to replace imports. Yet it is an important case for it shows very clearly that nation trumped empire and Commonwealth in manufactures as well as in food. Even if it had been the case in the past that imperial production for the United Kingdom was promoted to support rentiers at the expense of the national productive base, this was certainly not true of the post-war years.
‘Will peanuts oust Sheep?’ asked a worried Australian newspaper in 1951.18 The reason for their alarm was that ICI had developed a process to turn peanuts into artificial wool. The fibre (Ardil) had been invented by ICI in the 1930s, working with a physicist at the University of Leeds (Yorkshire was the centre of the wool industry) who was studying the structure of wool.19 Small-scale production started in 1946. The new plant at Dumfries costing £2 million was built in 1949–50, at a time when industrial building was restricted to what were taken to be vital projects. Unilever built a new £1 million plant on the Mersey to extract the oil from the peanuts, from which it made margarine, the residue going on to Dumfries.20 Ardil, hailed as ‘one of the greatest textile discoveries of the century’, was actively promoted by the government: the president of the Board of Trade, Harold Wilson, even wore an Ardil suit.21 While the infamous groundnuts scheme (from whose peanuts Ardil would have been made) had failed by 1950, Ardil was in production till 1957. It was doomed by its low strength when wet. The failure caught the attention of the US humorist Art Buchwald, who noted rather cruelly of the project that ‘Dumfries squirrels started hoarding peanuts in hopes the price would go up, the imperial monkey institute was working on a synthetic peanut just in case they couldn’t get the real thing any more, and a rival company was hoping to come out with a cloth made of popcorn’.22 The story was a real-life parallel in some ways to the brilliant Ealing comedy The Man in the White Suit (1951), in which the young scientist played by Alec Guinness invents a revolutionary new textile.
A second example was national synthetic rubber to compete with imperial natural rubber. A synthetic rubber plant was built in the early 1950s and came into operation in 1958, even though Malaya, in the empire, was one of the largest rubber growers in the world. The Dunlop Rubber Company, although it had its own Malayan plantations, wanted synthetic rubber, and this helped override the interests of great plantation owners such as Guthrie and Harrisons & Crossfield, who also operated from the United Kingdom.23
Aluminium provides one of the last examples of such strategies. In 1967–8 it was decided by the government that it would support the building of two, which ended up as three, aluminium smelters, two powered by nuclear power stations, the other by a new coal station. The argument for them was that they would reduce imports mainly from Canada, in the Commonwealth, and from Norway (in EFTA). Hardly debated in parliament, the plan was controversial and contested from abroad, especially from Norway, a close ally.24 The plants were all subsidized through special electricity and coal contracts, and through loans and investment grants.25 The Rio Tinto Zinc plant in Anglesey was 15 miles from the Magnox reactor at Wylfa – both started operating in 1971 and closed in 2009. British Aluminium’s plant at Invergordon, the largest industrial project ever seen in the Highlands, took its power from the new AGR at Hunterston B and ran between 1971 and 1981.26 The third was fed by a new coal-powered station next to it – at Lynemouth in Northumberland. It opened in 1974 and closed in 2012. For economic liberals this represents a serious misuse of resources.
In the case of textiles the situation was different in that Commonwealth imports were threatening an existing British industry. Remaining Commonwealth preference gave producers in Hong Kong, India and Pakistan access to the British market no one else could have. Imports flooded into the United Kingdom, though in the late 1950s the government imposed (high) supposedly voluntary quotas on Commonwealth imports, an early version of the later much more general Multi-Fibre Agreement, to keep the textiles of poor countries out. The home industry continued to contract, however, and in 1959 the Conservative government passed a new Cotton Industry Act, which financed the closing-down of much of the industry, subsidizing most of the destruction of machinery and redundancy, and also providing investment grants. Courtaulds and ICI stepped in to reshape textiles as a large-scale, integrated capital intensive industry with synthetic fibres, of which they were the major makers. The mantra of large firms, research and modernity, was put into action but failed, both in the face of cheap imports and later in an inability to compete with high-quality European production. By contrast, the German, French and Italian textile industries, better protected individually and then collectively through the EEC, expanded. By the late 1950s Germany and France were making more cotton textiles than the United Kingdom, with Italy following in the early 1960s.27 What looked like continental backwardness – protected small and medium firms – turned out better than British large-scale modernity.
There was an unexpected aspect to the new textile industry. Being more capital-intensive, it required shift-working, indeed continuous operation, which had not been true of most of the older textile industry. Furthermore, the work was no longer so skilled. Night shifts were special in that they required men, as women were banned from such work. For this reason, and because local men and women did not want to work in what was a low-wage industry, the factories started recruiting Asian, mostly Pakistani, men in what had been a predominantly female industry. This happened from the 1960s through the 1970s, creating entirely new communities. Not only did Pakistani workers make textiles for the United Kingdom in Pakistan, but in the old textile centres of Oldham, Blackburn, Rochdale, Bradford and many more.28
CARS AND SHIPS
Textiles were clearly a dying industry, but there were many industries which were extraordinarily successful. The British motor car industry was very large and fast-growing, and rapidly changing. In 1950 it was not only the largest car producer in Europe but the largest exporter of cars in the world. It accounted for 17 per cent of British exports in the early 1960s, and one-quarter of world exports of cars. Into the early 1970s the industry remained a very significant exporter – around 40 per cent of its output went overseas. The British Motor Corporation, a merger of the giant Austin and Morris firms, was the largest car maker in Europe in the late 1960s and the United Kingdom’s largest single exporter.29 It exported over a third of its production. It went multinational and bought factories in Italy and Belgium. Imports were minimal, though edging higher, already over one in ten new British cars by 1970. It was, however, the British car industry which brought cars, easily the most expensive family purchase other than a house, to the British masses by the 1970s.
The car industry had modern equipment. Many of the wartime aero-engines and aircraft factories in the West Midlands were turned over to cars. Vast new plants were added with government support in the early 1960s, taking the industry away from its centre around London and the West Midlands. The US-owned firms were in the lead. Ford built a new factory in Halewood (it made Anglias, later Escorts) while General Motors went to Ellesmere Port (making Vivas). Both factories soon grew to over 10,000 employees each. Rootes (soon to be taken over by Chrysler) went to Linwood in Scotland.30 The industry succeeded in expanding production into the early 1970s, not least through these new plants.
British car production peaked in 1972 and went into a rapid absolute decline. The change came with the opening of markets to foreign cars. Not only did the general British tariff fall but it was abolished within the Common Market, such that by the late 1970s, European cars came in for nothing. Japanese cars paid 11 per cent. In the 1970s British Leyland, which succeeded BMC, saw its production halved. It was nationalized and closed many factories. By 1981 it was a small producer, concentrated in Longbridge and Cowley, and was smaller even than LADA of the USSR, not to mention FIAT, Renault, Citroën and Peugeot, or Volkswagen. The British nation now produced more cars than Spain or Canada, though not by much.31 It was telling that the two long-established American firms in the United Kingdom, Ford and General Motors (Vauxhall), both did relatively well, and did so by integrating their production across Europe. The Ford Escort (1967–) was built in Halewood and in Germany and had been designed as a European car; the Vauxhall Viva was a variant of the Opel Kadett. Opel was the German arm of General Motors, Vauxhall the British.
The case of shipbuilding is another one of early success followed by a failure even in the domestic market. In 1950, as well as building for its own register, it was supplying one-third of foreign registrations, and nearly half in 1951.32 The shipyards in the 1950s employed more people than ever before. But shipbuilding could not expand production very much – it kept producing at roughly the same level into the 1970s. However, had it kept its world share of ballooning output by 1970 it would have had to be ten times larger, which would have been impossible, showing the absurdity of taking falling shares of an expanding world production as an index of failure. Yet other nations did expand production. As early as 1954 it was overtaken on world markets by Germany, and by the following year by Japan.33
Into the 1960s British yards were producing a full range of ships. In 1961 the Harland & Wolff shipyard in Belfast, which had built the Titanic, completed its last large passenger liner, the Canberra for P&O (having recently completed the last passenger reefers for the Royal Mail Line). Some years later the John Brown yard on the Clyde built the last great British passenger ship, the Queen Elizabeth 2 for Cunard, successor to the Queens of the 1930s, which had come from the same yard. Vickers at Barrow-in-Furness, which had built five beautiful passenger ‘Strath’ liners for P&O in the 1930s, completed its last liner, the Oriana, in 1960 for the Orient Line. The very last passenger liner built in the United Kingdom was built by Swan Hunter & Wigham Richardson, builders of the Mauretania: the Vistafjord, completed in 1973. These ships, like many other liners of the 1950s and 1960s, were to be switched to cruising. But when new cruise ships came to be built from the 1980s British shipyards got none of this work, which went to yards in Italy, Germany, France, and Japan. British yards lost all sorts of business in the 1970s. An exception was the Liberty Ship replacement SD14, designed like the Liberty Ship itself by a shipbuilder on the Wear, in this case Austin & Pickersgill, a progressive firm.34 From the 1960s, and overwhelmingly so in the 1970s, British shipping lines generally had their ships built abroad. With a few exceptions the yards failed to diversify into the booming market for equipment for the North Sea oil and gas industry. The result was dereliction on the shores of the Tyne, Wear, Clyde and Mersey, with a few yards kept going only by warship business. Like the British car industry, British shipbuilding was nationalized in the 1970s while in a state of terminal decline.
LABOUR AND THE NEW INDUSTRIAL STATE
For the British working class the years from 1950 to at least the late 1960s were years of success. In contrast to the interwar years, there was no permanent cadre of the unemployed and no underused industrial capacity. These were the years of the long boom where there was sustained demand for labour as well increasing productivity. Indeed, the productivity of the workforce was increasing as never before. The relations of output, productivity and employment varied by sector. As we have seen in agriculture, increased output went with falling employment, while in mining decreasing output and decreasing employment went together. Manufacturing was an intermediate case, with increases in output and employment. British workers were going into manufacturing jobs as never before, and each worker was producing more and more. This obvious point needs stating because so much attention has focused on the productivity deficit with the USA that the fact of growth in productivity, which needs explanation, is ignored.
The reasons for the increasing productivity of labour are difficult to pin down, but the conventional story has the ring of truth. In some sectors the scale of the machinery made processes more efficient in terms of capital and also required fewer operators. An example would be in very much larger chemical plants. Secondly, new techniques replaced labour, for example in the making of motor car engines, where transfer machines moved work automatically between machine tools. Another very important reason was changes in the organization of work, partly in relation to scale of operation. There may have been an element of the deskilling of a large section of manual work, though by no means all. Even more than in the interwar years, the years of the long boom were those of the management expert, the white-collar organizers and measurers of blue-collar work. The idea that British business was slow in taking up new machines and methods is not borne out by studies.35 Increasing the productivity of labour was the routine concern of managements, and of the state.
High levels of employment, and a culture committed to production, gave trade unions a strong place in the private economy. The largest unions were overwhelmingly in the private sector and some of the nationalized industries. Still the largest was the Transport and General Workers Union, with over 1 million members in 1960. It was, as its name suggested, a general union, with many members in manufacturing industry. Second was the Amalgamated Engineering Union (the AEU, ‘the engineers’), third the National Union of General and Municipal Workers, then the National Union of Mineworkers and the National Union of Railwaymen (at over 300,000 members).36 There were then electricians and shop workers, and some public-sector-only unions. Then came a mass of very small unions, among which by 1960 came the once-mighty textile unions.
The largest unions were national unions, operating in every part of the country. Furthermore, they entered into national agreements with groupings of employers, employers’ federations, to set wages and conditions at national levels, or at least setting national minima. In the economy nationally organized ‘free collective bargaining’ became the norm, not because it had not existed before, but because the unions were now in a much stronger position than between the wars. Wages were set by national processes and, at least in part, at national levels. A good example would be the large national strikes in shipbuilding and engineering in 1957.
Trade unions were involved in the management of society and economy in other ways too. One important legacy of the war and the post-war Labour government was what was called ‘tripartism’. In many areas of industrial policy boards of various kinds were created, made up of representatives of employers, trade unions and independents, chosen by government, and sometimes government officials. Examples would be the Development Councils for particular industries, one of which was the Cotton Board, or the National Economic Development Council (NEDC) established in the early 1960s, and its sector working parties. Trade unions were also represented on all sorts of other tribunals, boards, and committees, balancing the employer interest. In another country they would have been called ‘social partners’. Trade union officials were thus a part of the system of administration of the nation, part of the extended machinery of government.
These tripartite bodies were in the end creatures of the state, there to perform work for the state. One important role for the trade unions and employers’ organizations in the eyes of the state was a very general one. Bringing them into the orbit of administration was a way of exerting control of both, in particular to marginalize those trade unionists and workers more generally who wanted to act outside the system. A similar logic applied to the employers’ side. Thus the state attempted to limit the range of legitimate action of both. While they looked to be independent and representative, these bodies were in part representing not their members but government, or at least the highest interests of government. Through this ‘corporate bias’ the state managed society, privately, outside the frames of party politics and parliament.37 The general secretary of the Trades Union Congress and the leaders of transport workers, engineers, miners and others were well-known public figures, often far better known at the time and since than the heads of the largest corporations or even nationalized industries. Among the well-known leaders were Frank Cousins and Jack Jones of the transport workers; Joe Gormley of the miners; Clive Jenkins of the white-collar workers; Tom Jackson of the postmen and many more.
In the 1960s a new politics of productivity developed in which attempts were made to get industry and trade unions to agree to procedures to improve productivity in such a way that both would benefit. Workers would be encouraged to leave declining industries by a new system of ‘redundancy’ payments as well. In addition, there was a great enquiry into labour relations in the late 1960s which recommended action against emerging unofficial industrial action. The idea was essentially to reach high-level agreements between capital and labour, and find means of enforcing them further down.
Through the post-war years there was a constant drone of criticism of the British worker, as peculiarly unproductive, far too prone, at best, to take too many tea breaks and to indulge in ‘wild cat’ strikes, and ‘Spanish practices’. Even in the later 1950s Harold Macmillan privately referred to paying the price of ‘industrial appeasement’ in the early 1950s Churchill government, when Walter Monckton was minister of labour.38 The criticisms of the British grew louder in the 1960s and reached a peak in the 1970s. The reason was that after decades of industrial peace strikes were back to the levels of the early 1920s. In the late 1960s the rising concern in government with shop stewards and unofficial strikes led to a proposal to repress such actions, in the form of the White Paper In Place of Strife. It was opposed by union members, and then union leaderships. It was replaced by a TUC undertaking that unions would exercise more control over their members.
The response of the Conservative government elected in 1970 was a major innovation in industrial relations legislation, the Industrial Relations Act of 1971. This brought the law into industrial relations, in contrast to the practice since the late nineteenth century of keeping potentially applicable law out through what were called immunities. In positively regulating industrial relations through the law, it consciously echoed continental European practice, at the very moment that the UK was to enter the Common Market. Other important acts regulating employment practices were the Race Relations Act, 1968 (which did not apply in Northern Ireland) and the Sexual Discrimination Act, 1975. The unions were mostly hostile to Common Market entry, and the members in particular, did not like the Industrial Relations Act, and there were mass demonstrations and boycotting of the law such that it became a dead letter. Five dockers imprisoned under the act were released by an obscure legal mechanism in the face of mass disobedience. The act remained in place into the 1974 Labour government, and it was in this period that the Industrial Relations Court ordered the sequestration of the funds of the Amalgamated Union of Engineering Workers (AUEW, formed 1971), which had participated in an illegal strike in a small firm and had refused to pay a fine. The AUEW called an immediate national strike, which led to the total collapse of the act. The Labour Party in office 1974–9 restored the status quo.
British workers were not more strike prone than others. Everywhere strikes were increasing in the face of the rising cost of living, as workers sought to keep their standard of living. In any case strikes were a minor cause of loss of labour – it was, in a bad strike year, comparable to that from industrial accidents and an order of magnitude less than sickness or unemployment.39 Furthermore, strikes were concentrated in particular industries. Strikes became particularly prevalent in some new industries, most notably in the car industry.40 For example, 1971 saw a strike in Ford, the largest-ever strike against a single employer.
British workers were productive. The negative image arose certainly in the 1950s, as it had in the 1940s, and to some extent earlier, through a comparison with the US worker, but a comparison with European workers told a different overall story. The productivity of the British worker was about the same as the German, who had the lead in Europe.41 Yet in the 1970s especially the idea that the British worker and trade unionism were responsible for a large difference in productivity with continental Europe became established, though the evidence was often poor. There were differences, but these were too easily ascribed to worker problems, and not enough to differences in equipment, management and so on.42 The idea that British workers or trade unionists were ‘Luddites’ was itself misleading. The Luddites were the rioters and machine-breakers of 1811 who were hostile to the capitalism that was putting them out of work, not to machinery itself. Indeed, there were no greater enthusiasts for new machines than trade unionists and large parts of the left.
Improving the quality of British industry for the Labour Party in particular meant taking state action to support and restructure key industries. In the early 1960s the centre and left of British politics in particular came to the conclusion that, contrary to the image of the 1950s, British business was backward, in its management, its investment in new products and processes, and even in the generation of these. In the period of declinism (see chapter 15) British capitalism was seen as seriously deficient compared to US and German capitalism, and even French. For Labour, in office from 1964, the answer was a new drive extending the breadth and depth of state intervention in industry. Particularly notable was the creation of the Ministry of Technology (1964) with a brief to take measures to stimulate machine tools and computers in particular. Its first minister was Frank Cousins, the leader of the Transport and General Workers’ Union. An Industrial Reorganization Corporation facilitated and encouraged mergers to create large national champion firms such as GEC, a merger of all the large electrical engineering firms, and smaller ones such as a national ball-bearing firm and a national computing champion (ICL). There were also state-backed mergers in shipbuilding leading to Upper Clyde Shipbuilders (UCS), and motor cars, leading to the British Motor Corporation (BMC). An Industrial Expansion Act (1968) gave the state increased powers of support and intervention. By the end of the 1960s the Ministry of Technology was a comprehensive industrial ministry with great powers of intervention across civil and military industry, and it also had control of the energy industries. It drew on the procurement ministries of the 1940s.
While in opposition in the late 1960s the Conservatives increasingly rejected the notion of industrial policy, or investment grants, or ‘picking winners’, or supporting what they called ‘lame ducks’. They came into office in 1970 and quickly put the strategy into action, disbanding the Industrial Reorganization Corporation and the Ministry of Technology.
However, the policy unravelled, and the party was to launch industrial policy initiatives which were more radical than had gone before. In 1971 the government saved Rolls-Royce, which would otherwise have gone under because of losses on its RB211 engine programme. It did so by nationalizing the company, a drastic step for a Conservative government. Following this it refused to save Upper Clyde Shipbuilders, the 1960s merger of all the yards on the Clyde, and one in which the government had a substantial shareholding, when it went into liquidation. The workers organized a famous work-in, and the government relented in early 1972, with the saving of most of the yards under new structures: Yarrow, Fairfields (Govan) and John Brown (Marathon). The one profitable one (Yarrow) left the group. A new Industry Act of 1972 gave the government huge interventionist powers. In 1972 the Conservative government announced a £3 billion modernization of the nationalized steel industry. It was extraordinarily ambitious, with six major bulk steel plants. There was expansion in capacity at Port Talbot (to 6 million tons), to add to ongoing development at Llanwern. There was another round of growth at Ravenscraig and a new 7 million-ton plant next to Lackenby, giving a combined total of more than 12 million tons output on Teesside. All this investment envisaged a workforce continuing to fall.43 What was remarkable in retrospect was the optimism of the plan – they were aiming for 35 million tonnes per annum by the late 1970s. Output would never reach anything like that – in fact steel production peaked in the early 1970s. This ‘technocratic, production-led vision’ did not survive the crisis of the 1970s.
TECHNO-NATIONALISM
One of the strongly recurring features of British industrial policy through to the 1970s was a powerful belief in the peculiar British genius for invention and brain work. In 1950, a socialist journalist, a former soldier, Alan Wood, commented that he ‘believed that Britain to-day is in the same position as Athens after the Peloponnesian War, still leading the thought of the world after losing its military supremacy’.44 The nationalist reverie Family Portrait, made for the Festival of Britain, hailed British inventiveness, the marriage of the poetry of science and the prose of engineering, exemplified by the jet engine, and also Penicillin, with a prominent role for radar and radio. Sir Dennis Robertson, professor of political economy at Cambridge, in lectures in the USA in 1953 referred to British ‘scientific and inventive genius which has flowered forth in Penicillin and the Comet and the atomic pile’.45 The Sunday Express boasted in 1961 how ‘the jet engine, the development of television, the first nuclear power station’ all ‘came from our tiny country … Household names like radar and penicillin – they were products of British genius’.46 All this went beyond idle, repetitious propagandizing. In his memoirs Harold Wilson made an extraordinary claim for British inventiveness. He believed that, after a period in decline, British inventiveness rose to new heights in the Second World War. The key British inventions of the period, which he took to be radar, jet engines, antibiotics and advances in nuclear research, were in his estimation powering an industrial revolution in the whole developed world. Had Churchill been able to get a proper royalty deal on these crucial advances, he claimed, then the whole wartime and post-war balance of payments issue would have been very different.47 There, in extreme form, is the techno-nationalist analysis of post-war history. Crucial elements of this view were in fact shared by others. The view that the United Kingdom had sold its wartime technological patrimony cheap was held by Harold Macmillan. The president of the United States, General Eisenhower, apparently recognized the claim, one reason, it is suggested, why he was willing to share nuclear secrets with the United Kingdom in the late 1950s.48
It should not be thought that the thesis was correct – none of the inventions Wilson cited could be claimed as uniquely British, nor were they in fact anywhere near as significant in transforming the world as he claimed. The jet engine, television and radar were invented in many places. All the great developments in nuclear science of the late 1930s and the war came from outside the United Kingdom. There were plenty of other over-egged techno-nationalist puddings after the war. The US pilot Chuck Yeager was rather surprised that the British film The Sound Barrier (1953) overlooked that he had flown faster than the speed of sound long before any Briton had. The much-celebrated world speed record held with the Fairey Delta FD2 experimental jet aeroplane in the mid-1950s lasted for around eighteen months, and was beaten by an aeroplane already in service with the USAF. As we have seen, the importance of the Calder Hall nuclear reactor (which is what the boosters had in mind) was the subject of another overblown claim.
Ideas of a uniquely brilliant British inventiveness helped bolster extraordinary levels of support for inventions. British governments were at great pains to develop within the nation, for the nation, these particular products of what they took to be British genius. In its first television party political broadcast (1953) the Labour Party called for more production to meet the balance of payments problem. This meant not just an increase in domestic food production and increasing exports of low-import industries, but also making the inventions that were the fruit of British brainpower. The party gave a list which included the very familiar examples of aircraft, jet engines, television equipment and radar.49
Other great British inventions came along and were enthusiastically supported over decades. The fuel cell, invented by F. T. Bacon (Eton and Trinity College Cambridge), who had worked for Parsons in the 1930s and was in Cambridge University after the war, was for decades a device of immense promise lauded and funded by politicians; it found only minor use in the US space programme in the 1960s.50 Sir Christopher Cockerell’s hovercraft was hyped and financed into the 1960s. These crosses between ships and aeroplanes were powered by jet engines. Six were built between the 1960s and early 1970s, and they plied the cross-Channel trade until 2000.
Indeed, one reason for subsequent failure in many industries was an over-commitment to the idea of British technical genius, and that the future would be determined by the latest inventions. The Ministry of Supply, and then Aviation and Mintech, with the aircraft makers, supported any number of British aircraft. Far from the home sales being a springboard for export success, they were often the only sales, to an unwilling customer. The nationalized British airlines had to be forced to take on, or were indeed given, every large British aircraft produced. They ranged from the Comet IV, the Britannia and the VC10 to the Concorde. While they took them on, they depended on US aircraft for most of their long-distance operations. Yet a mythology developed that the government had failed to support British aircraft enough.
Barnes Wallis, one of the most celebrated wartime inventors, went around complaining of the failure of the government to support his swing-wing aircraft, the Swallow. For a decade he toured the public schools with a lecture on ‘The Strength of England’, advocating the building of short-take-off airliners and nuclear-powered merchant submarines – between them these distinctly British and un-American machines would put the United Kingdom back at the centre of the world.51 The creativity of its engineers and their new technologies of trade and communication, he argued, could arrest national decline and reinvigorate the British Commonwealth. His ‘second Elizabethan Age’ (a 1950s cliché) was backward looking, imperialist, anti-American. Yet there was a powerful nationalist element too. Wallis disliked emigration (which imperialists liked) as well as immigration (which imperialists could not always be seen to dislike). Like the other celebrated aeronautical inventor of the Second World War, Sir Frank Whittle, he also spoke out against non-white immigration.52 Both ended up addressing the Monday Club.
The United Kingdom had a politics of invention and development which can be characterized as ‘bipartisan technological chauvinism’.53 It was indeed bipartisan, stretching from the far left to the far right, though some elements in the middle were critical. The supersonic Concorde passenger aircraft is a case in point. The key committee which led to its development was established in the Ministry of Supply in October 1956. The treaty to build it with France was signed in 1962 by Julian Amery, formerly a key figure in the Suez group, and still a hard-right, anti-American and pro-European figure associated with the Monday Club. Both the British and French Communist Parties were strongly supportive of Concorde – support for technology and anti-American nationalism were central features of their ideology too. How could they not be, given that the USSR very much believed in the notion of the ‘scientific-technical revolution’ and supported anti-American nationalism? The Anglo-French Concorde went into production and service in the 1970s; the USA and the USSR had, wisely, cancelled their own programmes.
Concorde, and the Europa rocket, which used a British first stage based on the cancelled Blue Streak missile, were important gestures towards European technical integration around the first British application to join. Concorde had an informal precedent in the very successful French Caravelle airliner, which, like Concorde, was essentially a French airframe powered by British engines. In 1967, a key part of the United Kingdom’s second move to join the EEC was to suggest the creation of a European Technological Community. Never fully spelt out, the idea was in part about giving technical expertise to Europe, sharing in order to reap economies of scale too. It was not just a matter of British superiority (which even some British officials thought should not be exaggerated), but that Europe could learn from the United Kingdom’s experience, which meant taking care not to develop machines with no market, which alas in practice included British-French and British-European projects. The United Kingdom wanted to pursue a much more industrially focused approach and for Europe to do so also.54
There was increased concern about the value of such a national-technical policy. Would it not be better to leave things to the market, to import aeroplanes and reactors and anything needed from the best suppliers rather than keep buying perhaps second-best and expensive British equipment? One answer was to focus research and development on real needs – the policy of the 1960s and 1970s – the other was to give up the game as a hopeless one.55 For example, Lord Rothschild argued that ministries should determine ‘the needs of the nation’ and get the research done by a contractor, to ensure less undirected, unproductive research was done.56 The difficulty was that for years the idea that British machines, whether the hovercraft or new kinds of nuclear reactor, would lead to successful exports was a central propagandistic notion. To be against these developments was to be against exports! But the exports never came – no large hovercraft, no AGR, no Concorde was ever sold abroad. By the late 1960s, in private, within government, this was already known to be likely, but this truth was too scandalous, too unpatriotic to utter. But there would be no more Concordes, and no more AGRs.
It should not be thought that the support of innovation came only from government pursuing deluded techno-nationalist policies. In the industrial and military sectors research and development boomed. Enterprises like ICI continued to dominate industrial research, with multiple laboratories, which now had hundreds of research staff. ICI in the early/mid-1950s spent £5 million per annum on ‘research’, using 4,500 people, around 1,500 graduates or equivalent. It spent around £100,000 on supporting research in universities and £3 milion on development (building and operating pilot plants) and technical service, of which £1 million and 900 workers (300 graduates) were on technical service.57 In fact, the 1960s and 1970s were a moment of creativity in British state and industry in smaller-scale activities away from the glare of state policy and often connected internationally. For example, in the 1960s in the STC (the British subsidiary of ITT) laboratories in Essex Charles K. Kao, born in China, trained in Hong Kong and the United Kingdom, devised the fibre-optic cable, for which he much later won a Nobel Prize. Also in the 1960s Donald Davies of the National Physical Laboratory developed packet-switching, a key element of the internet. Sir Geoffrey Houndsfield of EMI developed the CT-scanner, introduced in the 1970s, and Sir Peter Mansfield of Nottingham University invented MRI imaging, also introduced in the 1970s. Neither had been to Oxford or Cambridge, very unusually for Nobel Prize winners, as they too became. The artificial hip can be seen as an NHS contribution to the world. It was developed in the 1960s by a surgeon, Sir John Charnley, working in a Manchester hospital, not a laboratory. British companies tended to be overtaken by American rivals, which were faster to innovate and familiar with their larger and richer markets. Lives were changed, but the economy was not.58 British research and creativity did nonetheless enter a golden age from the 1950s. Between 1950 and 1984 there were only two years without a British Nobel Prize, a much higher tally than before 1950. The scientists of the United Kingdom stepped into the place once occupied by German professors.
Outside the sciences, too, the years from the 1950s were much richer than earlier periods in many fields. British artists such as Francis Bacon, Lucien Freud, Henry Moore, Richard Hamilton and David Hockney found a place on the walls of global art galleries denied to their predecessors. The Beatles (on the national scene from 1962–3) and the Rolling Stones (on the national scene from 1963–4) conquered not only the rest of the world, but the USA too. The Beatles were awarded the MBE in 1965, which caused a scandal; some believed a myth that they were awarded it because they were great dollar earners.59 They certainly earned more for the country than Concorde or the hovercraft or fuel cells. Jimi Hendrix achieved success and died in London; Bob Marley made his name in Kingston, Jamaica and London. British groups of the late 1960s and 1970s (the Kinks, the Who, the Yardbirds, Cream, Yes, Genesis, Queen, Pink Floyd, Deep Purple, Black Sabbath, Led Zeppelin) made global impressions where British record players or transistor radios were not known. Elton John and David Bowie were outer Londoners who conquered the Anglo-American charts as individuals. The Rock and Roll Hall of Fame is almost entirely an Anglo-American affair. Punk may have had roots in New York but it grew in the United Kingdom like nowhere else, where it had a distinctive local political and sartorial impact. On the other hand, British film became noticeably worse than that of the 1940s. It descended to Norman Wisdom vehicles (inexplicably, they were popular not only in the United Kingdom but in Albania), the Doctor series of seven films (four with Dirk Bogarde), the so-bad-they’re-good Carry On films. The 1970s saw the last of the Hammer horror flicks and dismal TV knock-offs (Dad’s Army, Up Pompei …). What could be achieved is shown by the work of US directors working in the United Kingdom. The blacklisted Joseph Losey made the cool and dark The Servant (1963) and Accident (1967) (both with Dirk Bogarde, and both adapted for the screen by Harold Pinter), and Stanley Kubrick made the immortal Dr Strangelove (1963). The Bond films were manufactured by British crews in British studios but were American/Canadian productions for a global market.
One way out of the seeming conundrum of historically unprecedented creative activity combined with disappointing economic performance is to explain away what is seen as a paradox of high innovation and low growth. But there is no paradox to explain. We should expect rich countries to grow relatively slowly and to innovate. We should not expect, in a world of shared innovations, for national innovation to lead to national growth. A counterfactual question can help us get at a core issue. After the war the United Kingdom, as we have seen, hitched its waggon to the United States, creating a relationship of deep dependence. It was, some thought, the fifty-first state of the Union. Imagine that was the case and that perhaps for strategic reasons this state was banned from doing any inventive activity or directed industrial policy. Would that state be richer or poorer than the United Kingdom? The first inclination is to assume that anywhere that doesn’t invent will be poor; on the other hand we know that all industrial areas of the USA were richer than the real United Kingdom. Why wouldn’t a fifty-first British state be richer too, by using everything the other states had to offer? Buried in these points are key issues which were contested through the post-war years – what was the relationship between economic, strategic, inventive, and political boundaries? What should they be?
In the late 1960s and 1970s it was noted that British-based businesses were expanding abroad. Similarly overseas businesses, especially from the US, were increasingly important with the United Kingdom. Manufacturing industry was being concentrated in fewer very large firms, and these were now typically multinational. The scale of British business overseas was contrasted with the seeming weakness of business in the United Kingdom. It was noted that Britain was second only to the US in the league table of who owned the largest businesses in the world. It was the ‘very strength of the cosmopolitan activities of British capital, which has helped to undermine further its strictly domestic economy’ was one conclusion from the left, a new version of a much older critique. British capital looked abroad for the best investment opportunities, weakening also the capacity of the British state to control it. British capital, it seemed, no longer needed the British state. Thus one analyst concluded, ‘leading sections of the British bourgeoisie have been effectively ‘de-nationalized’, not through their own weakness but through the weakness of the British state and their own home base’.60
British capitalism put class before nation, while the left put nation before class.61 This, to the left, helped explain why an ailing British industrial capitalism, like turkeys voting for Christmas, wanted to enter the EEC. A rational, national capitalism would have preferred to stay behind the protectionist barriers of the nation rather than be exposed to unfettered trade, which would destroy so much of it. There was no question that business was in favour of entry to the Common Market/EU in 1961, in 1967 and on the moment of entry in the early 1970s. Another argument was that British capital was furiously pro-EEC because it was financial capital, the brains of capital, which was in the saddle, and that it had won the decisive victory back in the Edwardian years.62 In other words that finance’s interests overrode those of productive industry. But there was little evidence that manufacturing took a different view to finance.
The other side of the same story is the increasing hostility of business to national industrial policies. The capitalist class took very different views of actions taken with respect to industry by Conservative and Labour governments. While the Industrial Expansion Act of 1968 was opposed, and later repealed, by the Tories, the more radical Conservative Industry Act 1972 was not. The Labour 1975 Industry Act was the subject of the most strenuous attack when it was barely more significant than the 1972 act, which indeed was the one through which key interventions were made. Great enterprises attacked Labour governments for their policies while being mostly dependent on government funding. Labour’s problem was not simply that capital was not national, but that even national capital was hostile to it. This had always been the key problem for Labour’s national project, and it never went away. As we shall see, Labour as a party attracted hardly anyone from business, indeed it was treated with suspicion by business. As far as state action was concerned, who controlled the state mattered as much as what it did.
THE DECLINE OF MANUFACTURING?
British manufacturing industry essentially stopped growing in the early 1970s. It lost market share abroad and at home. The dominant way of understanding this has been to postulate a deep-seated failure, one with causes intrinsic to the 1940s, 1950s and 1960s, but often to a much earlier period, usually the period 1870–1914. A better story than one of early and continuing failure is one which points to the quite exceptional and extraordinary strength of British production in the 1950s and 1960s, with total dominance in the home market and an exceptional short-term dominance in exports, not just in the Commonwealth. Such a position could not have continued to exist as other countries entered export markets more strongly as they developed their industries faster, and certainly not once protections to the home market were progressively removed. The United Kingdom was peculiarly oriented towards manufacturing in the period 1950–73 and peculiarly successful in it, but this large manufacturing sector could not compete against new, rapidly growing and similar manufacturing industries elsewhere. The issue was not so much the failure of British industry, as the success of foreign industry.63 It might also be that the state was no longer in a position to support manufacturing, as it continued to do in agriculture and in basic infrastructure.
That there was no failure of manufacturing to explain, only relative success before the 1970s, helps us make sense of the fact that most of the explanations for the failure of manufacturing simply did not work even on their own terms, though many have had great authority. The British were not, for example, weighted towards old industries, for some ‘old’ industries were precisely the ones other European countries did increasingly well in. Equally, British industry was exceptionally strong in new industries such as cars, electronics and aviation in the 1950s and 1960s, and these industries too suffered in the 1970s. The popular thesis was that trade unions and workers were to blame, but the strike record was not radically different from elsewhere, and strikes were highly concentrated. The high labour productivity levels – except in particular industries – did not suggest a general problem of work either.64 There was no convincing evidence either of a reluctance to take up new production techniques.65 The idea that there was a failure to be sufficiently committed to the future, and to support technical innovation, has proved especially attractive to declinists. Yet the evidence is simply not there. Huge expenditures, peaking at 3 per cent of GDP in the early 1960s, went into ‘research and development’. At that time, this was a very much greater commitment to creating the new than that of any nation except the USA or the USSR. This high expenditure was only partly due to government. Industrially funded research and development expenditures boomed from the end of the war.66 Into the mid-1960s these private, civil expenditures were absolutely and relatively greater than those of German or Japanese industry. Furthermore, British industry distributed its effort across different fields in much the same way as the Germans and the Japanese – into chemicals, mechanical and electrical engineering. By the late 1960s Japanese and German firms were catching up and taking over; indeed the growth of British private industrial research came to an end in 1968 – spending actually fell into the early 1970s. It was not a historical aversion to innovation which led to low spending from the 1970s onwards, but rather disappointment that previous high levels of research and development had not produced more benefit. It was the extraordinary, indeed reckless, futurism of the 1950s and 1960s not its lack, that made later decision-makers reluctant to invest further in making the future.