I don’t claim to be an economist, and am duly deferential to those who do, since anyone who can see patterns and rationalisations for the chaotic jungle that national and international economies have got themselves into is patently gifted. Or is making it up as they go along.
Vince Cable, the UK’s Business and Innovation Secretary, is an economist and I don’t think he’s busking. This morning he’s announcing an “industrial strategy” for his department and, as an unreconstructed Harold Wilsonian disciple, faithful to the idea that planning and a degree of judicious steering can bring economic serenity and perhaps even growth, Cable has been pretty consistent both in opposition and in government about the need for this kind of thinking.
I wish him luck with this, and suspect he’s going to need it. Because while Cable has seemed clear that the path to economic recovery depends on increased value-adding activity, various of his colleagues in government appear unable to grasp the fundamental link between added value and real growth. How else would one explain the ideas that house-building or extended retail opening hours might kick-start the economy?
[We should be building more houses because of social need and because of simple stock rotation (replacing those no longer fit for purpose), but growth doesn't come that way: except, of course, for the house builders who like getting their hands on government money. And retailing largely recycles wealth, but doesn't create it.]
So I suspect that Dr Cable’s Cabinet colleagues – and even perhaps his new departmental “minder”, the arch-Conservative loyalist Michael Fallon who arrived at the business department last week – will be content to let Vince do his stuff to keep him quiet, but won’t then follow it up with much. Value-adding industries, and manufacturing is a prime example but not the only one, are widely seen as “nice to have” but not necessarily as “need to have”. So there may be some lip-service. But not much more.
Follow-up has always been a problem in the past with industrial strategies. Where business and industry want consistency of policy over the medium term, governments have always come and gone, and their industrial ideas come and go with them. Some of the stuff that Dr Cable harks back to has overtones of MinTech and Neddy and the NEB from the 1960s and 1970s: all swept away by the next political shift in the 1980s.
Consensus has been limited. But actually, you can see that in those limited areas where there has been wider political agreement about instruments to promote growth and investment, they’ve been pretty successful. Schemes such as the Manufacturing Advisory Service and bodies such as the Technology Strategy Board and the national technology centres of excellence have survived changes of government and do seem to make a difference. There’s at least some continuity in the skills debate these days too.
But there still seems to me to be a disconnect in views about the economy as a whole, and too many people with economic influence who have wrong ideas about how it can be made to work. Dr Cable strikes me as clear-headed and heading in the right direction; but the bigger question is whether his colleagues are listening to him. I hope they do.
