THE BRITISH steel industry’s decline and the success of the Chinese model are just part of it, writes Joyce McMillan
One drop of rain on your windowpane doesn’t mean to say there’s a hurricane coming; but all the same, there’s been a loud, insistent pattering and beating, in this week’s British politics, that suggests times are changing, at a rate that many western governments are struggling to match.
The first great, ominous splash – from the Tory government’s point of view – appeared during last week’s BBC Question Time, when a tearful woman victim of George Osborne’s planned tax credits cuts forced what was, for many Conservatives, a belated recognition that large parts of our labour market are now so dysfunctional that huge numbers of UK families – 3.3. million households, or one in six of all working households in the country – simply cannot afford the basic necessities of life without substantial government subsidy, to the average tune of around £100 a month.
And then, with an ever-louder rattle on the panes, came the announcement of continuing severe job losses in the British steel industry, including closures in Motherwell that may well mark the final curtain for steel-making in Scotland; neatly paired with a state visit to Britain by the president of the country seen by most experts as the immediate cause of the British steel industry’s current crisis, the People’s Republic of China.
Over the last generation, following a series of market-style reforms, China has grown into a huge commercial and trading giant, not only helping to reduce wages and prices across the developed world, but developing a growing interest in overseas investments.
So this week, even as Chinese “dumping” of cheap steel on the global market led to a new wave of closures and redundancies in the UK, Britain and China ceremonially signed a deal which will enable EDF, the huge energy giant mostly owned by the French and Chinese governments, to build and operate the next generation of British nuclear power stations, and to reap huge profits in the form of a sky-high guaranteed energy price, while the British taxpayer shoulders most of the risk.
And the point about this tale of top-level global deal-making is that it signals the undeniable triumph, in key strategic areas of the economy, of a Chinese economic model which, while it has some market features, is a million miles from the kind of competitive free market in basics like energy or steel that the British people were promised in the 1980s.
We know, of course, that China is not a “free” country; its human rights record is dire, and its economy obeys market rules only when they do not conflict with the priorities and decisions of the Communist Party of China.
Yet now, western governments have come face to face with the truth that they either have to let the global market – with China as its leading player – dictate the end of industries like, say, European steel-making, or they have to take traditional protective action in the form of tariffs and subsidies; and they are facing those decisions at a time when they no longer have a strong ideological framework for taking such protective measures, since all of them are at least formally committed to a world of free trade, and the reduction of such barriers.
Like the Scottish Government, they build a bridge with Chinese steel on one hand, while on the other vowing – under the pressure of events – to “leave no stone unturned” to save domestic steel-making capacity that is not commercially viable. But it seems that not one of them, after a generation of exaggerated free-market rhetoric, has a plan that would clearly set out the bottom line in terms of basic industries and capacities that must be protected, and that would act as a basis for negotiation with international trading partners – inside the EU or beyond it – over any tariffs or subsidy involved. It’s been a week, in other words, when the age of prevailing free market dogma has encountered a severe and serious reality check, in relation to real wage levels in the UK, to the survival of our steel-making capacity, and to our ability to build and maintain our own energy supply; and it has found us – even those of us who have long been aware of the weaknesses of the prevailing orthodoxy – completely unprepared with any strong and coherent alternative model of how an open, competent and thriving 21st century economy should work.
In London, they try to fill the void with marching bands and golden coaches, and the ceremonial bravado of former Empire, as they allow large chunks of our infrastructure to be renationalised by almost anyone, so long as the nation involved is not the UK. Here in Scotland, we continue to snipe at one another along last year’s referendum battle lines, as if either continuing UK government or complete Scottish independence could possibly provide all the answers to problems on this scale. And in Brussels – the EU capital that should be a key starting-point for any intelligent and workable international response to this moment of change – they seem to have entirely forgotten that there was once an alternative “European social model” to be proud of, designed to take account of human needs, as well as of economic efficiency.
During the next few years, the battle over the European Union will dominate UK politics, with the kinds of EU rules that make it difficult to protect Britain’s steel industry a main point of contention. Yet as we join that battle, we should recall two things. First, that a global economy in the grip of profound change requires not a pulling up of drawbridges, but a new international politics, designed to protect the human at regional and global level. And secondly, that unless the EU soon rediscovers its own humanistic mission – the carefully-negotiated social democracy that once gave its international structures a richer meaning – it will become not a linchpin of that new international politics, but a bureaucratic and dogmatic obstacle to it; and one that will have to be swept aside in any effort to re-empower the people, and to bring the international trade deals that increasingly shape our lives under new kinds of democratic control.