There is a chastening appendix in Michael Porter’s 1990 book The Competitive Advantage of Nations, in which he offers tabulated examples of how nations come to specialise in certain areas of production, just as businesses do. I paraphrase, but it reads something along the lines of:
Germany: Machine tools, luxury cars, petrochemicals
Japan: consumer electronics, cars
USA: software, telecommunications, pharmaceuticals
But this week, surely our biscuit manufacturers can be joined by designers of Public Private Partnerships (PPP) as the envy of the world. While the precise design of the banking bail-out is no doubt determined by the contingent economic and (to a lesser extent) political vagaries, it is surely no coincidence that we are leading the world in an area that we have been dabbling in since the early 1980s: tweaking the legal and managerial boundary between the state and private enterprise.
A PPP is a concept with no particular referent. The ippr carried out a commission on the topic in the early days of New Labour, which attempted to codify and categorise the possibilities, but these are fairly diverse. Most are Private Finance Initiatives (PFI), in which the private sector finances, builds and project manages something, then hands it back to the state.
Generally the term ‘PPP’ simply implies a more complicated contract with more subtly defined outputs, such as that used for the London Underground PFI. But then there is hybrid ‘Public Interest Company’ model (such as Channel 4 or Welsh Water). Then there are instances where the state part-privatises a public entity, as with Britain’s air traffic control in which the state holds a ‘golden share‘. And to this list, we can now add the part-nationalisation of high-street banking, with the state holding ‘preference shares’. This all follows Britain’s earlier great gift to the world, seized by experts in the IMF as a tool to help Eastern European and developing nations liberalise their economies, of privatisation.
The fact that the direction of travel has tended to be from state to private sector shouldn’t disguise the fact that Britain is unusually comfortable in this domain of policy. All Brown needs to do, in part-nationalising something (albeit, something with centuries-old dominance in the capitalist system) is to retrace Britain’s steps. Having spent the 1990s stripping ideology from the question of ‘public or private?’, part-nationalisation can hardly be considered an especially ideological act, any more than part-privatisation was considered to be.
Rather like watching someone splash around in the sea shouting ‘come on in, it’s not cold!’ the rest of the world can only gulp and throw itself into the fray. But I wonder how much more nerve-shredding it is for them. Whether we have employed any of our technical PPP nous in the banking bail-out is difficult to say, but we have surely benefited from an expanded notion of the plausible.
Now if only there were a global biscuit, ahem, ‘crunch’, then we would see Britain restored to its role as the centre of the global economy.