Most of the country is hurting. But it won’t be able to escape the shadow of the mighty metropolis without an overhaul of capitalismby Paul Collier / October 12, 2018 / Leave a comment
Across most of Britain, capitalism is simply not working. In many emerging economies, it continues to transform opportunities and raise living standards, as it does for the UK’s metropolitan elite. But you can see its failure elsewhere simply by driving across the country. Alongside the glittering metropolis of London, you will find broken cities and dying towns.
The post-war generation, of which I am part, perhaps grew complacent in the assumption that a capitalism that worked in parts of the country would, in the end, work for it all. No matter where we hailed from, we had seen capitalism delivering on its promise: living standards and life opportunities rose everywhere. But history teaches us that capitalism periodically derails—and more spectacularly in some places than others.
It was in the factories of northern England that 19th-century capitalism harnessed economies of scale to drive up productivity; and yet it also turned the world’s first industrial cities into hell on earth. Life expectancy collapsed from 33 years for a rural labourer to 19 for the urban working class. Some 80 years later, between the wars, British capitalism again failed huge tracts of the country. The penury and mass unemployment of the 1920s and 30s were intensely regional, sparking the Jarrow march and inspiring George Orwell’s The Road to Wigan Pier. Another 80 years hence, and we watched, mesmerised, by the unfolding of the 2008 global financial crisis.
At first, this most recent crisis seemed to be playing out way up in the towers of high finance. But, in truth, both the causes and the consequences go far beyond the banking sector. Its origins lay in profound economic changes that began in the 1980s. And 10 years on, the after-effects are most evident well away from the City—in those provincial high streets that have become wastelands of boarded-up stores, payday lenders and pound shops.
Economists in their ivory towers scratch their head about a “productivity puzzle,” while—back in the real world—workers endure the longest squeeze on wages since the Napoleonic Wars. What both halves of this are really about is that in many forgotten communities there is nothing useful to do. Official figures in September showed that the upward march of life expectancy had…