OK. This is a bit rough around the edges, unfinished and a month after I wrote it, but here goes…
7th Feb 2012: I’m writing this post in response to Will Stirling’s interesting piece in The Manufacturer on “Manufacturing and the broken model of laissez-faire capitalism” , while it is still fresh in the mind. So here goes.Tom Lawton, head of manufacturing at BDO, spends a lot of time in Asia and is one who questions whether the UK approach to laissez-faire capitalism is now defunct as a modern model for manufacturing. “One of the things I like about China is the focus by the state,” says Lawton. “There is an absolute focus and intention for things to happen in the way they want them to happen. Much of the funding that goes to the big state banks will be released to companies, including manufacturers, whom the state wants to receive it. They [the state] are directive on the regions and what they want them to manufacture – for example the Eastern seaboards are now more expensive, so the flow of lower value-add work is directed to the west of China, which alleviates low employment there. He adds: “Some of this state direction – we might call it interference, they might call it model – is very interesting, because it has been so effective in creating this powerhouse. Without becoming a communist state, are there lessons that the UK can learn in applying some aspects of that framework?” Tom refers to the oft lamented absence of a long term, sustainable framework for manufacturing growth in the UK. The Chinese model, of selective manufacturing support, is authoritarian and undemocratic but, in a world facing a second recession, it has been extremely effective. “How can we find a framework and make it last for 20 or 30-years, without being interrupted by political changes?” says Lawton. “We ought to have an industrial platform that has a lifespan that is a lot longer than the political lifespan.” Is this possible? Look to Germany. Several manufacturing-centric policies, such as the more regional-focussed lending terms of the Sparkassen banking system, are enshrined and will be continued whichever political party comes to power, notwithstanding a few tweaks. Capitalism has worked and raised living standards across the world. But pure, laissezfaire capitalism with no state intervention has not worked for UK manufacturing. As all countries look to making and trading things to pull them out of the mire, it’s time for intervention and a far more strategic approach to what and how the UK manufactures.
We should remember that the UK was not always so apparently rudderless on it’s maunfacturing policies and behaviour.
– A continued common purpose links government policy, cultural norms & outcomes (in the long term) e.g. imperial ambitions and entrepreneurial spirit (industrial revolution and beyond), rebuilding after war (WWI & II spring to mind), depression (here again ?) and cold war rivalry.
– The UK’s move away from tangible production to focus on the intangible, where money can apparently be won and lost at the touch of a button (even if this is not actually the case) has served to weaken the connection in people’s minds between activity, work and physical transformation of materials, and the generation of wealth (in all it’s forms)
– West Germany’s imperatives after WWII were clear : re-build, re-build, re-build (oh, and by the way, prevent the USSR from invading), for which it recieved considerable finance and backing, but building on a mean cultural determination for the nation’s long-term financial and physical security. The UK’s were similar, but with loose-ends from Empire and needing to pay the US back for it’s help.
– The US only strengthed it’s belief in it’s (almost divine) right to be the land of the free (and the entrepreneur), which of course …. blah b;ah
In China, it is long-term policy and strong control that dictates economic behaviour
In Germany, it is strong culture that drives behaviour – a historical senses of order, supporting manufacturing, a relentless drive for exporting and a long-term view – it is “cultural givens” not necessarily rules that dictate economic and financial behaviour.
In the USA, it is also string culture that drives behaviour – an almost divine right to entreprenuerism and to be the best, through generations
In the UK … hmmm. Hey, well. We’ve got the Royal Family. We had an economically driven Empire (which we still keep on about), not disconnected with the Royal dimension. We have professional politicians, who haven’t got a clue. (I’m looking for some positives, really)