As the Conservative Party threatens to break up on the contradiction between market dogma and traditional Conservative values and institutions, it is sobering to reflect that neither the Labour Party nor the academic Left has produced a hegemonic interpretation of this event, or a persuasive alternative vision of the future.footnote The Labour leadership, traumatized by four electoral defeats, has imposed a tight control over policy debate and proposes only respectful and cautious modifications to the Thatcher legacy on monetary policy, taxation, the health service, education, even Europe. Tony Blair represents Major’s leadership travails as those of a man prevented by his rabid right-wing from drawing back modestly from the excesses of Thatcherism, not as symptoms of a profound national crisis which Labour has a vocation to resolve. Academics, for their part, have produced excellent retrospective studies of numerous aspects of Britain’s decline, but not, in recent years at any rate, any systematic, general analysis, let alone a persuasive set of policy proposals. A severely wounded labour movement; a somewhat disoriented Left intelligentsia (producing symptomatic titles like Beyond Left and Right, Politics in an Antipolitical Age, Reinventing The Left);footnote1 no fusion of popular energy with powerful analytic and programmatic initiatives, like Labour’s embrace of Keynes and Beveridge in the 1940s.footnote2

Yet the labour movement is far from impotent, there is a wealth of ideas, passion and organizational talent in the new social movements, and the general public is deeply disillusioned by the policy failures of the market dogmatists, and by the combination of all-too-familiar elite incompetence (the comi-tragedy of Black Wednesday, the Maxwell pension-fund scandal, the Stock Exchange’s £70 million taurus computer farce, the self-destruction of Barings Bank, and so on and on) with unprecedented levels of dishonesty and greed (‘sleaze’). But although the social forces that could occupy the space vacated by bankrupt neo-conservatism exist, they are not united around an agreed analysis, a shared vision of the future, or a project for realizing it. It is surely a hunger for such an analysis and project that accounts for the extraordinary reception accorded to Will Hutton’s book, The State We’re In, 23 weeks on the bestseller list (eight of them as no. 1), and forty-five thousand copies sold.

Not that Hutton’s book doesn’t fully deserve to have a profound impact; although its style is popular, its general analysis of British political economy is the most significant and persuasive since the 1960s theses of Anderson and Nairn, which set the agenda for so much of what has been written since. There are important differences between his work and his early predecessors’, of course. Theirs was historical and theoretical, and aimed at a mainly intellectual readership, whereas Hutton’s is more popular in style, and prescriptive. Also, whereas Anderson and Nairn in the 1960s called, however implicitly, for a socialist project for which neither the times nor the Labour Party were ready, Hutton advocates a package consisting mainly of ‘radical bourgeois’ reforms whose aim is above all to make British capitalism more productive and ‘harness it to the public good’—a project for which the times are certainly ready, even if ‘New Labour’ is, apparently, not.

Hutton’s thinking also reflects a critical shift in the debate since Anderson and Nairn. They and most of their contemporaries saw Britain’s problem as distinctive, or even unique; as E.P. Thompson said, for them it was a question of explaining ‘the peculiarities of the English’. Since then, however, it has become clear that the us economy, whose superiority was still taken for granted in the 1960s, is also relatively unsuccessful in terms of international competitiveness, even though its social and political history is quite different.footnote3 For Hutton, therefore, the issue is not one of explaining British exceptionalism, but of drawing on the comparative research that has been done on the oecd countries and the nics since the late 1970s to explain how, in general, the distinctive institutional and cultural systems of different capitalist countries result in systematically different levels of economic performance; and then applying the results to Britain.

Part of the book’s impact is due to Hutton’s exceptional capacity for synthesizing vast amounts of diverse information, so that the manifold aspects of Britain’s economic weakness, social disintegration and political degeneration can be seen in their interrelationships, with the Thatcher–Major years figuring as a terminal exacerbation, made possible by the Conservatives’ ruthless abuse of an archaic state system and the extra-constitutional social and economic power of non-manufacturing capital. At the centre of the analysis are the relatively low profitability, low investment, low productivity growth and declining market shares of British manufacturing (central, because exports of services cannot possibly expand fast enough to relieve manufacturing of the prime responsibility for paying for Britain’s imports). What accounts for the weakness of manufacturing is a complex of mutually reinforcing factors, stemming from the economy’s organization ‘around a stock-market-based financial system and clearing banks averse to risk. . .uniquely bad at supporting investment and innovation’ (p. 21). The web of constraints runs from lack of cheap long-term credit for industry, to the low status attaching to manufacturing relative to finance or the professions; a company law that discourages long-term strategic investment; a national industrial training ‘system’ that offers no real obstacles to free riding and hence has failed to make any significant dent in Britain’s uniquely poor supply of skilled workers; and a macroeconomic policy-making process that invariably favours financial interests over production.