Monday, 12 December 2011

Good-bye to the future

By Hubert Schmitz

For an Anglo-German (I have dual nationality – British and German) it is heartbreaking to see how the UK Government is de-coupling from Europe. There is nothing wrong in defending the national interest. But what is the national interest? Our Prime Minister equates it with the interests of the financial sector, clustered in the City of London. This is deeply worrying.

Continental European Governments have come round in favour of the financial transaction tax in order to slow down speculative financial flows. IDS research has shown that such a tax can be effective. But the UK government regards it as against the national interest. Continental European governments want to exert more control over the financial sector. This is never easy but at the time of the last election even the Tories proclaimed that this was needed. Now it is judged against the national interest.  

An even greater tragedy unfolds if we look at the wider picture and reflect on the position of the UK and Europe in the world. I have just come back from research trips to China and Vietnam. The pace of change and transformation in East Asia is visible and breathtaking. It has been for some time and seems set to continue. The global power shift is clearest in industrial production but is beginning to extend to industrial innovation.  And most interestingly, it is extending to the green economy. China is ramping up public and private investment in wind power, solar power and electric vehicles. Meanwhile the UK and most of Europe is scaling back investment in the industries of the future.

The UK decision over whether and how to collaborate with Europe needs to be seen against this bigger picture. A well-functioning European financial and industrial system can find a way of competing and cooperating with China.  We have shown this in a recent study on the European and Chinese wind power industry. A mal-functioning European financial and industrial system means that European governments, including the UK governments, will be limited to administering decline.  The national British interest would have been served by working with continental European government on ways of reforming the financial sector so that it supports rather than undermines the real economy.  It is a hard thing to do and the Prime Minister turning his back on Europe makes it even harder.

4 comments :

Mick Moore said...

Very well said. I wish it were only the PM/Tories. But you saw that 62% of Brits polled approved of his decision, and about 18% disapproved. I think this goes well beyond material interest issues: British history – or the way in which it has been constructed and reproduced (all that insularity-superiority stuff) – is now turning round and biting us in the bum in a major way.

Martin Bell said...

Yes, critically important – setting Europe’s gyrations about its financial system in the wider context of economic and technological transformations in ‘the outside world’. From the UK perspective on that, a neglected part of last week’s news was that on Thursday the UK Government’s Department of Business, Innovation and Skills published a major new Innovation and Research Strategy for Growth [http://www.bis.gov.uk/policies/innovation/innovating-for-growth]; then on Friday Cameron impaled it on the hallowed spike of the supremacy of the City – surely a significant step in “administering decline”. But, with the exception of Germany, has non-UK Europe shown it might do much better? Does it make a lot of difference to the prospects of ostriches whether they bury their heads in the sand in collective groups or as scattered individuals?

Martin Bell – SPRU-Science and Technology Policy Research

Matthew Lockwood said...

Indeed. If one takes seriously Carolta Perez's view (http://www.opendemocracy.net/article/economics/email/how-to-make-economic-crisis-creative), that we are now in the midst of a major shift to a new economic and fincnial phase, in which the green economy will play a major role in shaping demand, then Britain (and the rest of Europe, mired as it is in the Euro-crisis) seems now miles behind the rising powers.

Davide said...

From a ‘developmental perspective’, I also agree on the need to think in global terms before taking local decisions, i.e. in the UK or elsewhere in Europe and outside. The specific decision of the British Prime Minister is an example of the type of elitist philosophy and solution/way out of the crisis that is increasingly advocated across Europe in recent months. Several countries and regions that are currently coping better than others with the crisis (e.g. including some economically advanced regions within Italy and Spain) start thinking about processes and mechanisms of separation from their current national and EU integration as this isolation would help them avoid the problems of the other less competitive, efficient, responsible countries and regions. Would it be the case? Is a new atomization of Europe a good solution? Some countries and regions might think so. However, there is also a well-founded hypothesis that the crisis might be not merely national and European - and not even merely financial -. It might have much wider (geographically) and deeper roots (founded in the real global economy and society). If this is the case, it is crucial that our political representatives do not to look for individual salvation islands (e.g. the City in the UK or Wall Street in the US), but search for more thorough, cooperative and sustainable solutions on a global scale.

M. Davide Parrilli, University of Deusto and Orkestra, San Sebastian.