I have admired Will Hutton for many years and devoured his book, The State We Are In, and his writing in the Observer. His most recent book is This Time No Mistakes - how to remake Britain.
Following a helpful introduction, Hutton begins by exploring the economic story of the USA. He looks at the freewheeling entrepreneurs: JP Morgan in banking and Carnegie in steel and their push for monopoly. [the links are to posts I have written for my History of British Manufacturing.] The monopolies were countered by antitrust legislation. The otherwise free market system though had inbuilt instability and banks and businesses crashed all too often After four decades of spectacular growth, the Wall Street crash and subsequent Great Depression demanded action which took the form of Roosevelt’s New Deal.
This had three main strands: regulation, the provision of credit with protection and a massive investment in infrastructure with a focus on employing those otherwise out of work. So we have the federal mortgage lenders, the SEC and a raft of social security legislation. It worked and formed the consensus of western economics for nearly half a century. Hutton acknowledges also the massive benefit to the US economy of production for WW2 of which I wrote in War on Wheels and Dunkirk to D Day.
The consensus began to crack in the seventies with the oil shocks and inflation. Hutton suggests that it was raised interest rates to cool inflation that led to the strengthening dollar and the flight of US manufacturing overseas. In the UK, as I wrote in Vehicles to Vaccines, it was North Sea oil that had a similar effect. Hutton suggests, in a later chapter, that UK interest rates raised for the same reason added to the strength of sterling.
The forces of the right, believing in the market and the small state, were ready in the wings and entered the scene with Ronald Reagan as the charismatic US face; much the same as Margaret Thatcher.
Neither Clinton nor Obama altered this new direction and left a country of disgruntled former workers ready to embrace Trump's brand of nationalism.
This very much sets the scene for the book.
Hutton then looks at the Tory years with particular focus on Thatcher and the way manufacturing was decimated. He explores the Brexit arguments and then the failed administrations of May, Johnson and Truss.
The next focus is on laissez faire and the way successive governments have embraced this doctrine combined with the straight-jacket of the small state.
In critiquing the doctrine he draws on the writing of Adam Smith, Chadwick and Engels, the action of Luddites, Tolpuddle martyrs and the Chartists, and finds practical examples of good practice in the Rochdale Cooperative and Robert Owen’s New Lanark. Interesting for me who has written on him he draws on John Ruskin's works on political economy in particular Unto his Last. Hutton of course writes on Marx and his critics.
1859 was a key date with the formation of the Liberal party. Hutton follows this by writing on influential thinkers: Green, Hobson, Hobhouse and their pupils Asquith and Keynes.
Interestingly he quotes from Churchill's Poverty: the study of town life
“ A poverty-stricken working class could not possibly spend sufficiently to drive the economy forwards, while the aristocratic elite and upper-middle class were too small to compensate. Instead, they saved, with the savings’ surfeit flowing overseas to empire and the financing of other countries’ industries.”
I have to observe that this is what we are witnessing in today's economy.
The growing union movement and the Liberal party found common cause and together selected Lib/Lab parliamentary candidates.
A somewhat belated fruition of this was the reforming Liberal Government of 1906-1911 and Lloyd George's budget.
I found it interesting that in 1918 when the franchise was enlarged to give the vote to some women, consideration was given but rejected for proportional representation, a topic to which Hutton returns a number of times in the book.
The interwar years contained the disastrous return to the Gold Standard and the hardship this caused. It contained too the ground breaking writing of Keynes whose influence Hutton warmly embraces. Sadly for Britain, governments did not share in the embrace but instead built tariff barriers around Imperial Preference which shielded Britain from healthy competition. The adherence to the small city remained key.
Moving to the post-war, Hutton rejoices in Beveridge and is admiring of Attlee and his government. He possibly offers warmer praise for Harold Macmillan and his Middle Way.
As a critique of post-war industry, Hutton offers this:
“ cosseted, dividend-hungry, rentier shareholders, aggressive shop stewards, disengaged finance and unenterprising managements looking for safety behind tariffs and cartels, rather than putting money into research and new products.”
This is very much what I found in my research into British manufacturing since 1951 as expressed in Vehicles to Vaccines.
Looking at governments, he sees missed opportunities and barriers. For Wilson the barriers were the multiplicity of trades unions, but also a city wedded to laissez faire. Heath is criticised, but Hutton points out that he did want to remove barriers that reduce competition. The SDP and Blairism in practice are both filled with missed opportunities, although the Blair/Brown years did bring vital change, not least in the focus on early years in Sure Start.
Looking at a way forward Hutton would like to seeing a co-operation of New Liberal and Ethical Socialist. The fundamental shift through is from the emphasis on the 'I' to the 'We'. He draws on the thinking of the Fairness Foundation.
There is much to be done. Hutton suggests that massive investment is needed to counter climate change, in infrastructure, skills, scientific research and levelling up. Increased borrowing would be possible if lenders could see that their money is being wisely spent. Increased taxation would be needed to service the debt. Our tax take is lower than many countries - but a poorly designed tax system needs attention.
A sovereign wealth fund is needed. Hutton looks at how British funds and banks currently invest - most goes to real estate and overseas. This needs to be reversed.
Housing, education and health care are key issues where those already on the ladder not only have massive advantage but also live in silos removed from the rest of society.
None of this will just happen. A whole host of national and business governance issues need to be address in tandem. Hutton does not avoid the elephant in the room: we must build a vibrant relationship with the EU.
"The aim must be to create an environmentally sustainable, high-productivity Britain that is less unequal, fairer and economically dynamic, and which, while global in its reach, is firmly anchored in its own continent. That is what Britain must invest for – a ‘We Society’ around which the private and public sectors can coalesce."
