Magazine article Issues in Science and Technology

The Second Coming of UK Industrial Strategy: The United Kingdom Dismantled Industrial Policies in the 1980s; Today It Must Rebuild Them to Create a Social-Industrial Complex

Magazine article Issues in Science and Technology

The Second Coming of UK Industrial Strategy: The United Kingdom Dismantled Industrial Policies in the 1980s; Today It Must Rebuild Them to Create a Social-Industrial Complex

Article excerpt

Industrial strategy, as a strand of economic management, was killed forever by the turn to market liberalism in the 1980s. At least, that's how it seemed in the United Kingdom, where the government of Margaret Thatcher regarded industrial strategy as a central part of the failed post-war consensus that its mission was to overturn. The rhetoric was about uncompetitive industries producing poor-quality products, kept afloat by oceans of taxpayers' cash. The British automobile industry was the leading exhibit, not at all implausibly, for those of us who remember those dreadful vehicles, perhaps most notoriously exemplified by the Austin Allegro.

Meanwhile, such things as the Anglo-French supersonic passenger aircraft Concorde and the Advanced Gas-cooled Reactor program (the flagship of the state-controlled and -owned civil nuclear industry) were subjected to serious academic critique and deemed technical successes but economic disasters. They exemplified, it was argued, the outcomes of technical overreach in the absence of market discipline. With these grim examples in mind, over the next three decades the British state consciously withdrew from direct sponsorship of technological innovation.

In this new consensus, which coincided with a rapid shift in the shape of the British economy away from manufacturing and toward services, technological innovation was to be left to the market. The role of the state was to support "basic science," carried out largely in academic contexts. Rather than an industrial strategy, there was a science policy. This focused on the supply side--given a strong academic research base, a supply of trained people, and some support for technology transfer, good science, it was thought, would translate automatically into economic growth and prosperity.

And yet today, the term industrial strategy has once again become speakable. The current Conservative government has published a white paper--a major policy statement--on industrial strategy, and the opposition Labour Party presses it to go further and faster.

This new mood has been a while developing. It began with the 2007-8 financial crisis. The economic recovery following that crisis has been the slowest in a century; a decade on, with historically low productivity growth, stagnant wage growth, and no change to profound regional economic inequalities, coupled with souring politics and the dislocation of the United Kingdom's withdrawal from the European Union, many people now sense that the UK economic model is broken.

Given this picture, several questions are worth asking. How did we get here? How have views about industrial strategy and science and innovation policy changed, and to what effect? Going forward, what might a modern UK industrial strategy look like? And what might other industrialized nations experiencing similar political and economic challenges learn from these experiences?

Fruit of the warfare state

Changing views about industrial strategy and science policy have accompanied wider changes in political economy. The United Kingdom in 1979 was one of the most research-intensive economies in the world. A very significant industrial research and development (R&D) base, driven by conglomerates such as BAC (in aerospace), ICI (in chemicals and pharmaceuticals), and GEC (in electronics and electrical engineering), was accompanied by a major government commitment to strategic science.

In common with other developed nations at the time, the UK's extensive infrastructure of state-run research establishments developed new defense technologies, as part of what the historian David Edgerton called the "warfare state." Civil strategic science was not neglected either; nationalized industries such as the Central Electricity Generating Board and the General Post Office (later to become British Telecommunications) ran their own laboratories and research establishments in areas such as telecommunications and energy. …

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