Wednesday, 16 October 2013

Hartlepool no more, Hull no more

The Economist has suggested that the old industrial towns and smaller cities of the North should be allowed to decline, instead of being "propped up on piles of public money". This is in equal parts a free-market critique of government intervention, a dig at the fiscal transfer policy of the last Labour administration, and a recapitulation of the old trope of "managed decline". The analysis is a little more rigorous than that of David Howell (frack the lot), insofar as it distinguishes between vibrant regional service centres like Manchester and Newcastle on the one hand and "urban ghosts" like Hull and Hartlepool on the other. The solution: "Governments should not try to rescue failing towns. Instead, they should support the people who live in them. That means helping them to commute or move to places where there are jobs—and giving them the skills to get those jobs". 

The Economist was founded in 1843 to campaign for the repeal of the Corn Laws and economic liberalism more generally. As such, it was part of the industrial capitalist consensus that had earlier led to the Poor Law Amendment Act of 1834 and the introduction of workhouses. While popular history has understandably focused on the human cost of this system, notably the callous principle of "less eligibility" and the lurid example of Oliver Twist, it is important to understand the economic calculation of the scheme's authors, which relates directly to the Economist's current concern.

The problem faced by capital in the early nineteenth century was a lack of labour in the growing industrial towns and a surplus of labour in the countryside, following the productivity improvements (enclosures, new technology) of the agricultural revolution in the eighteenth century. Many labourers willingly migrated from "rural idiocy" to the new towns to seek work, but found that the nascent factory system and commodity markets were volatile, leading to alternating periods of employment and unemployment. As many of the new towns were not even incorporated at this time, the local parish-based relief was inadequate to the task of feeding the growing population during periods of inactivity (wages were too low to allow saving). The consequence was that people drifted back to the villages, a challenge both to the rural poor law commissioners and to the urban industrialists who faced labour shortages once business picked up.

The solution to this problem was the workhouse, which meant that labour could be "warehoused" in the new towns during downturns, with the (minimised) cost being shared by all manufacturers (i.e. ratepayers). There is a direct thread from this pragmatic public provision to the support of the NHS (which inherited many of the workhouses) by industrial capital during the post-WW2 social democratic heyday. 1834 was the point, as Karl Polanyi noted in The Great Transformation, when the treatment of labour as a (fictitious) commodity crystallised. Whereas David Howell sees the North essentially in terms of its natural resource capability (i.e. land), the Economist sees it as a source of labour, which shows you that not much has changed. The problem then is a purely practical one of the transfer of the young and fit, with the old towns left as warehouses for the elderly and infirm.

Coincidentally, there has been a corresponding ripple of interest in the prospect that the centre of our large (and thriving) cities, notably London, may be evolving into a "dark inventory" (shades of Jean Luc Godard's Alphaville), with property increasingly bought up by absentee (i.e. foreign) owners. As many of them seek capital appreciation and a hassle-free asset, the attraction of renting the property out declines, leading to city centres populated largely by house-sitters and modern-day levites in the temples of capital.

There is an element of ahistorical nonsense about this dystopian vision. The foreign wealthy have been buying up central London property for centuries (Greek tax-dodgers are following in the footsteps of French ancien regime emigrĂ©s), while Mayfair and the like has always had a semi-resident population (in town for the season, in the country for the rest). That said, the idea that the use of high-value property as a safe asset is bad for both the city and the economy is incontestable. Townhouses are not a productive asset and a market that discourages their utilisation is not healthy. The problem is not that the centre of London is going to become deserted any time soon, but that capital is there rather than in Hartlepool or Hull.

The establishment response to this is not to question the mysterious ways of capital but to suggest that the fault lies in us, the people, for being in the wrong place at the wrong time. It is surely obvious that once the idea of "work for your benefits" becomes fully established, the next logical step will be enforced relocation. Unlike the international migration of old, which was informally (and inefficiently) driven by land clearances and starvation wages, this will be an era of national directed labour (emulating Chinese best practice), with the surplus of the North being used to undercut low-wage, migrant labour in the South. Instead of a letter from America, you can expect a text from a relative gutting chickens in Norfolk or (assuming they've got a degree) serving coffee to yummy mummies in Kensington.

PS: The title of this post was inspired by seeing the film Sunshine on Leith the other day. Though "a Scottish Mama Mia by the Edinburgh Tourist Board" or the "anti-Trainspotting" does not immediately sound enticing, it was actually rather good. Well worth a decko.

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