Conor here: Engaging with Craig Murray’s recent article, The Beat of the War Drums, opens an intriguing dialogue. It raises questions about the affluent elite in Europe who, after dismantling industries in their own countries, now appear to rally for military action. Several interpretations come to mind:
- The war rhetoric may merely serve as a distraction while they escalate their exploitation. (It may also be a political diversion; however, it coincides with ongoing privatization efforts that degrade citizens’ living conditions).
- They might be suffering from severe Covid-induced cognitive dysfunction.
It seems plausible that these two factors have now intertwined. The pressing question is how long until the situation reaches a breaking point.
By Richard Murphy, Emeritus Professor of Accounting Practice at Sheffield University Management School and a director of Tax Research LLP. Originally published at Funding the Future.
For four decades, we were led to believe that Britain could thrive without manufacturing, relying on finance to create wealth. This premise has fallen flat. Our imports now exceed exports, our towns are in decline, and our prosperity rests precariously on speculative finance and property booms, rather than on genuine productive capacity.
In this video, I delve into the political decisions behind Britain’s industrial decline, the long-term investment damage caused by Thatcherism, and Labour’s continued reverence for foreign acquisitions. Rebuilding our national manufacturing capacity requires intentional government initiatives.
We urgently need regional public investment banks, a tax system that encourages actual production over speculation, and a comprehensive industrial strategy that harmoniously integrates modern manufacturing with care, education, and innovation. This approach is crucial for our well-being, security, and the future of our democracy.
Recently, someone asked, “Why does the UK no longer seem to produce anything?” This insightful question speaks to the essence of our understanding of growth. Can a country genuinely prosper without a manufacturing sector? This fair inquiry comes at a time when we’ve been told for 40 years that finance and services would herald our riches, and the reality is we have not seen that success.
Figures like Rachel Reeves continue to claim that the City of London is the crown jewel of our economy, a primary growth engine, and the foundation of our prosperity.
We were misled into believing we could thrive on financial engineering while outsourcing manufacturing. This notion is nothing more than fantasy economics. Money cannot replace the act of making; you can’t live on money alone. I wouldn’t advise trying to consume it, especially since most currency exists only as electronic data—consuming microchips is not advisable.
The reality is that we now find ourselves in a dependent economy. Britain consumes more than it produces; our import levels surpass our exports. This fact underscores the dangers of our reliance on property bubbles and hot money, rather than nurturing actual industrial and national capacity, which has been depleted over the years.
Why does this matter? Because manufacturing is not merely a nostalgic echo. It fosters skills, design capability, and innovation. There is fulfillment in creating something tangible. Personally, one of my hobbies involves crafting items from scratch—transforming concepts into functional realities.
Manufacturing also cultivates apprenticeship opportunities, teaching sustainable skills and providing stable employment. This process in turn bolsters local economies through beneficial ripple effects, which carry significant social and political implications.
Our reliance on imports has eroded a sense of ownership regarding our identity and the essence of our communities. This industrial decline has left many towns across the UK desolate. While some of this loss may not reflect in GDP, the effects are glaringly visible on our streets. This decay has contributed to the rise of far-right sentiments, feeding on the despair that pervades abandoned regions.
We must make decisions. The government opted for financial supremacy over industry in the 1980s. I recall the onset of Thatcher’s policies; I was eligible to vote for the first time in 1979, and her administration set out to dismantle British manufacturing. Unemployment soared to millions as she systematically closed factories, prioritizing the desires of the wealthy while disregarding working-class needs. Her mantra of market freedom effectively meant freedom for the City to dictate terms, discouraging long-term investments.
Share buybacks replaced meaningful research, benefitting executives at the expense of labor. The dominance of finance replaced the foundational role of factories. We allowed banks to manage land allocation, neglecting true innovation funding. As a result, manufacturers have lacked patient investment, and Labour now champions foreign takeovers—misclassified as foreign direct investment—representing a loss of national assets and future revenue.
To foster a revival, action must be purposeful. Just as dismantling manufacturing was a conscious choice, reconstructing our industrial base requires similarly intentional government strategies. We need robust public investment banks, like those that have supported Germany’s industrial strategies for years.
These banks must cater to regional needs; it’s imperative to establish institutions for Scotland, Wales, and across various regions of England. Localized decision-making is vital so funds can be effectively directed to communities that require them.
The tax system must also align with this vision. It should incentivize genuine investments rather than mere profit extraction. The current model, which grants tax relief indiscriminately across all claimed investments, is untenable. What we need is a system that provides clear incentives for substantial productive investments and phases out support for detrimental financial pursuits.
However, I want to highlight a crucial point: not all growth stems from producing more goods. This is vital to recognize. We need to forge a partnership between sectors. Care, education, healthcare, and research also contribute genuine value. Their role in enhancing our collective ability to live well is equal to that of manufacturing.
Neoliberalism may have categorized these sectors as costs rather than investments, yet they are essential for well-being. We need to prioritize initiatives that allow us to thrive collectively.
Our public sector already houses productive assets; hospitals and universities create knowledge and enduring capabilities. Genuine growth nurtures human and social capital, which these institutions exemplify. Furthermore, they support innovation while respecting ecological constraints, which is fundamental for our future prosperity.
So, what actions must the state take? It needs to invest, coordinate, and plan effectively.
We must rebuild our energy and manufacturing sectors.
We need investment in care and education to drive innovation.
We need to transition towards a green economy, enabling us to live within our ecological limits.
And we must reform finance to ensure it serves societal needs, rather than the other way around.
This doesn’t necessitate nostalgia for an industrial past. The images of smoky chimneys and steam engines belong to heritage, not our future. This traditional model of industry is just as mythical as the belief that finance could ever replace it. Our goal should be to create value that fosters sustainable well-being, calling for a new industrial strategy.
A contemporary industrial strategy must intertwine modern skills with a focus on care and innovation alongside manufacturing capabilities. This is crucial.
We possess the skills.
We hold the creativity.
Looking around, it’s evident that these qualities are present. What we lack is the political vision to connect these assets and the governmental resolve to invest in this transformation.
Manufacturing must regain its place in a well-rounded economy. We need to restore the social foundations upon which production relies, ensuring that growth enriches society, not the reverse.
We can still usher in a new industrial era—one that respects boundaries, prioritizes people, and emphasizes meeting genuine needs over mere wants. By doing so, we can enhance our lives and recognize manufacturing’s crucial role in our future. It’s time to invest in this vision once more.
What are your thoughts? Should we increase investments in manufacturing? Is an industrial strategy necessary? Should tax incentives target genuine manufacturing instead of financial manipulation? Do you believe there is a desire among people to work in this manner? We welcome your feedback.
