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The decline and fall of the British economy (2022)
- deleted 2y ago[deleted]
- ezconnect 2y agoThey transitioned from manufacturing to financial engineering.
- jsnell 2y agoIn the 19th century?!
- rapsey 2y agoOf course UK has been a major financial hub (banking and insurance) for centuries. Look at the history of the Rothchilds for instance. You can not be a naval power without a finance sector. It is way too risky and expensive.
- jsnell 2y agoOf course they had financial institutions. The OP was making a far bigger claim than that: "They transitioned from manufacturing to financial engineering". Sorry, but if there is one claim you can't make about 19th century Britain, it's that they transitioned away from manufacturing.
- librasteve 2y agoAfter WWII there were several phases of deindustrialization in the UK. - 45-55 the postwar boom took hold, manufacturing switched from weapons to electrical equipment (GEC), lighting (Thorn) cars (Rover, Austin…) and so on - 55-65 wealth spread to the working class finally and the 30s slums were cleared (council houses and high rise flats). all this domestic growth hid the rise in other countries - far east, india and so on - which ate into traditional manufacturing export markets with low costs. the consumer was happy with low cost imports, better housing, and service industries - the Beetles - took off - 65-75 poorly conceived loss making statist interventions to try to defend uncompetitive domestic primary industry coal (NCB), steel (British Steel) and secondary manufacturing (British Leyland), shipping … these were easy for unions to capture and bled the nation dry - five years of economic disaster ushered in Thatcher, killed the unions, released the City and by 1985 services had eclipsed industry once and for all In this potted history, the economic transformation of the UK from manufacturing to services was total by the late 90s. Similar economies … France, Germany have chosen a more managed mixed economy placing more value on job security and wide employment. Let’s see how that works out for Starmer and Reeves.
- jsnell 2y agoBut again, the article is talking about the 19th century. The 1800s. How are these data points from the latter half of the 20th century relevant?
- Fizzadar 2y agoYes. The square mile has been a financial centre since the 16th century (possibly earlier): https://en.m.wikipedia.org/wiki/City_of_London https://en.m.wikipedia.org/wiki/City_of_London
- jsnell 2y agoThe OP claimed that the cause of the decline was a "transition from manufacturing to financial engineering", seemingly oblivious that the article was discussing the 19th century. You seem to be implying that the presence of finance institutions in the 16th century supports the OP's thesis. That predates the industrial revolution, so obviously mere presence of financial institutions is not any kind of sign can't mean there's a "transition from manufacturing to financial engineering". If anything, those financial institions are a prerequisite for a rapid industrialization.
- achow 2y agoThe London Stock Exchange was founded in 1773.. Amsterdam saw its first stock market appear in the early 1600s. But the modern stock exchanges only emerged later during this era in London and New York. https://www.strike.money/stock-market/history https://www.strike.money/stock-market/history
- jsnell 2y agoSo just to be clear, are you claiming this as proof of Britain deindustralizing in the 19th century?
- achow 2y agoPerhaps. Banks became more important for financing industrial growth, as entrepreneurs and business owners needed more capital. The Bank of England was created in 1694 to fund wars, and was given a monopoly on joint stock banking in 1708. https://www.thoughtco.com/development-of-banking-the-industrial-revolution-1221645 https://www.thoughtco.com/development-of-banking-the-industr... Once the great minds of the country understood that there are easier ways of multiplying their wealth (trade, colonisation, wars..), one can imagine the shift in their priorities - from investment in engineering to financing agents of wealth creation.
- vishnugupta 2y agoIt can be argued that financial engineering is what enabled their trading operations to begin with. Long distance voyage was an extremely risky venture and only a ruling king/queen had money and risk appetite to finance it. The joint stock corporation enabled spreading of that risk across thousands of investors and East India Company was one of the first joint stock corporation. What's more one could sell their equity holdings in exchange for cash so one wouldn't have to wait for years before getting return on investment. We tend to forget the financial engine along with changes to contractual laws to only focus on daring voyages, military etc.,. But of course all of that had to be financed.
- dangsux 2y ago[dead]
- deleted 2y ago[deleted]
- fujincodes 2y agoIn a fair world, where there is equal access to basic things required for living life (food, health services, education), the UK has no business being a top economy. They don't have the land area, nor the population, nor the natural resources. They were propped up by the colonialism for a bit but now are fast going back to be a small inconsequential country.
- weatherlite 2y agoWell in a fair world why do some countries get to have lots of land area and resources and some don't ? Because they "got there first"? Why should Saudi Arabia or Canada be extremely wealthy?
- fujincodes 2y agoYeah, luck plays a part too. Saudi Arabia got lucky with oil, without which it was just warring desert tribes. I happened to see pictures of UAE Sheikhs before the discovery of oil, and they were not very royal, to say the least. Canada has a ton of natural resources, they ought to be wealthy.
- radicalbyte 2y agoYou have it the wrong way around. Look at the US. They have it because they "got there LAST", took their diseases with them and wiped out the natives.
- TeaBrain 2y agoThe "fair world" positioning of their comment makes little sense. It reads as if they believe that a economy should be based solely on resource extraction and if a country doesn't have plentiful resources in their borders, then they don't believe the country should be a "top economy".
- zoky 2y ago> They don't have the land area, nor the population, nor the natural resources. If those are the determining criteria, how do you explain Singapore?
- throw1117 2y ago[flagged]
- vishnugupta 2y agoThe word colony appears just once. Britain's economy was built on extracting resources from her colonies around the world. Surely what was happening in India, African continent, and elsewhere had some bearing on rise/fall of their economy? Perhaps they got spread too thin trying to administer so many colonies with so few people? Perhaps colonies started exerting more and more resistance?
- fujincodes 2y agoThe UK has always been a poor country except for a few hundred years when they were propped up by enslaving other people and looting them.
- nbevans 2y ago[flagged]
- fujincodes 2y agoThat is entirely orthogonal to the matter at hand. But go ahead, expose your bias and take a guess.
- nbevans 2y ago[flagged]
- fujincodes 2y agoI have no bias against the UK if that's what you're implying. In fact, I very much like English literature etc. I am just stating the fact that they have historically been a very poor society with a large divide between the haves and have-nots.
- radicalbyte 2y agoThat holds for every society historically as the period we are living in is, relative to the history of civilisation, one of incredible wealth and abundance. The question is - is our current level only an historical blip?
- switch007 2y agoThe article avoids the most interesting period of the decline and fall of our economy which is post-WW2, a period in which America played a substantial role
- philwelch 2y agoWW1 was the critical period. Part of the reason Britain was so insistent on high levels of reparations from Germany is because they needed the money to pay their war debts to the US, which they ultimately defaulted on at the start of the Depression.
- orwin 2y ago1915 was peak coal in England , 2004 peak gas and 2008 peak oil in the north sea.
- switch007 2y agoNot that coal disappeared shortly after 1915. It was going relatively strong until the mid 60s and dropped to 1/3 of the peak in the 80s. In terms of production tonnage
- orwin 2y agoYes. To be very clear, due to technological improvements allowing better eROI and better access to resources that couldn't be exploited previously, a "peak" isn't catastrophic: the production just become flat and sightly down as the best mines empty out. But having to import energy sources from outside your country is a good way to limit your industry growth.
- tonyedgecombe 2y agoThe UK coal industry employed over a million people in the early 20th century.
- wqaatwt 2y agoAlso Britain sacrificed its industry in favor of the banking sector (there were of course other more complicated factors) by refusing to devalue their currency like France did.
- deleted 2y ago[deleted]
- stann 2y agoThe author's confidence in their conclusions hints at naivete at best
- seanhunter 2y agoThis website is produced by think-tank members who have an angle that the UK is in decline and needs to take specific (neoliberal lassez-faire) economic policy steps to regain its position in the world ie its a piece of political astroturf disguised as historical analysis. The same crowd also produced ukfoundations.co which is a similar sort of thing. For some reason people post their stuff on here from time to time.
- switch007 2y agoOh that explains a lot
- deleted 2y ago[deleted]
- Animats 2y agoMuch of Britain's early industrial success came from having coal, iron ore, and water power all close to each other. That's a rare situation worldwide. That closeness allowed starting up a high-volume iron industry. Once railroads came in, and heavy low-value materials could be moved cost-effectively, such centralization wasn't necessary. Iron-making goes way back, but mostly it was powered by charcoal made from wood. Most of the labor was in digging out ore and cutting wood. Once coal was used to make coke, the process worked much better. (This is all pre-steel. Steel is another story. Steel production in volume only began in the 1880s, and Britain led only for a few years until passed by the US.)
- EVa5I7bHFq9mnYK 2y agoWhat about slave labor? Looks like significant economic advantage in US favor, at least until 1865.
- fmajid 2y agoIf so, the South would have been more economically developed than the North.
- EVa5I7bHFq9mnYK 2y agoChatGPT: The average wealth of a free person in the South was significantly higher than that of a free person in the North. In 1860, the average wealth of a free Southerner was $1,042.74, while the average Northerner's wealth was $546.24 1. In the Lower South, the average wealth was even higher, at $1,508.61 1.
- bell-cot 2y agoIn the correct circumstances, slave labor can be a considerable advantage. In other circumstances...not so much. Maintaining a slavery-based society is, socially, a huge hidden cost. (That's everything from shouting down objecting moralists to putting down slave rebellions.) And for socioeconomic reason, slave labor societies often trap themselves in a relatively crappy local maximum. Such as the American South's plantation-based and agriculture-dominated system.
- blackeyeblitzar 2y agoThe island itself does not have much in terms of resources. And it does not have a large competitive population like China or India. And it does not have the economic attractiveness like the US. And it no longer has a colonized commonwealth to exploit. Sure, London has fame, culture, and some economy. But it does feel like the last piece of a dying empire. I am often surprised when I watch videos of suburbs or rural areas in England, because it simply looks poor and trashy. Maybe that is true in most countries, but I somehow expected something different and … British?
- deleted 2y ago[deleted]
- ChrisArchitect 2y ago(2022)
- thomassmith65 2y agoApparently, the 'high order bits' for a nation to gain economic supremacy are boring things like raw materials, land, size of work pool... and less so lofty things like culture, demographics, system of government...
- rich_sasha 2y agoWell, in an epoch where these things matter. I can imagine we're entering an epoch where access to battery tech/resources, GPUs and cheap energy is what matters. Plus good teaching universities...
- thomassmith65 2y agoThat's probably more the case now that there aren't any new resource-rich continents to colonize. Maybe in the distant future, some country will claim a passing asteroid full of rare metals and gasses, and become the economic superpower of its era.
- 1oooqooq 2y agoexcept gpu etc are the tulip equivalent. only matters as speculation between the already richm the new fortunes are all based on rent today. including colonialism. every south America and Africa country privatized all their infrastructure to American or European companies in the last 10 years. telephone, water, power, transportation, banking.
- t43562 2y agoThe UK spawned a bunch of successful countries. Since it lost control, some have been wildly successful and all have developed. So there's something about them and their way of operating that worked. Part of that has to be location - the Dutch were in the wrong place and got stomped on by Spain to their detriment but I think they had the same attitude to enterprising/adventuring/financing - perhaps even more so. As a colonial myself the bit about exploitation is just so much cheap envy/sour grapes/whatever. All over the world people get exploited by someone and get conquered by someone. A "country" is just a lot of bits that someone conquered. In the ancient world I don't think anything was great but it was probably better in the end to be conquered by the Romans than many others. In the same vein the British weren't the worst and got a bit smarter over time. What they really did was open the world to trade, of course in just as unfair a manner as any other colonial power ... but it was both good and bad for them. Initially they had the industrial revolution, but they couldn't stop the same thing happening elsewhere once they turned on the flow of trade. Now a university degree isn't a guarantee of a great job - because many people have one. Similarly many countries have industrialised economies with an educated population now. Europeans or any other formerly advantaged country find it harder to command high prices for their own products while enjoying the products of less advanced countries at a discount. Countries with large scale like the US and China can make the incredible investments needed to make the next advancements. Countries like Britain can only do it when they team up as in the EU. The Brexiters are essentially luddites who cannot see this writing on the wall - they desperately believe that scaling up is something they can avoid. They want to retain control of something that shrinks until it is nothing because they are scared utterly **tless of the changes that might happen if they aren't in control. It's like trying to climb back into the womb.
- Dalewyn 2y ago>Countries like Britain can only do it when they team up as in the EU. The Brexiters are essentially luddites who cannot see this writing on the wall The UK remains one of the world powers and the Pound Sterling one of the reserve currencies thanks to their familial ties with the Five Eyes and the Commonwealth Realm, and select friends like Japan. Island country and continent countries bloody hating each other is a tale older than history. If anything, it's the EU (namely France and Germany) who need to figure out how to get countries fully on board with them.
- Anotheroneagain 2y agoI don't get why so many such analyses get so focused on the textile industry, as if it was the only thing that mattered. It was the time of the rise of electricity, chemistry, and internal combustion engines. And England was an especially slow adopter - the traffic in London was entirely based on horses into the 20th century, long after many major cities adopted electric trams.
- imtringued 2y agoReading about urban life in Berlin during the 1920s was kind of wild. It is so surprisingly relatable.
- tim333 2y agoMost economic growth seems to be driven by technology, both physical like machines and intellectual like legal and financial systems. For most of the world's history there wasn't much economic growth, things were much like they were a thousand years before. The UK got rich through the industrial revolution, but then other countries copied that which didn't make the UK poorer in absolute terms but did in relative terms as the rest of the world caught up. There's a graph of that here https://www.visualcapitalist.com/wp-content/uploads/2017/09/gdp-world.jpg https://www.visualcapitalist.com/wp-content/uploads/2017/09/... A lot depends how you move along the curve. (graph is from this article https://www.visualcapitalist.com/2000-years-economic-history-one-chart/ https://www.visualcapitalist.com/2000-years-economic-history...) The next thirty years of the curve should be interesting with AI and all that.