Friday , September 17 2021
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Can this leopard change its spots?

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Perhaps the most contentious – and least asked – question about industrial civilisation concerns its origins.  Why, of all the potential places in the world, should a small group of islands in the northeast Atlantic have emerged as the cradle of industrialisation?  Many possible reasons have been put forward, including:

  • The protestant work ethic
  • Capital accumulation from the slave trade
  • Local geology – abundant water power close to seaports
  • Raw materials, especially coal, iron ore and limestone
  • The science of the Enlightenment.

Each of these played their part, of course.  But prior to the 1820s at least, these conditions could be found in several European states as well as in the newly liberated American States.  So, again, why the British Isles and not France, Belgium, or New England?  The pre-industrial use of machinery in manufacturing occurred in all of these places.  Indeed, American colonists manufacturing their own metal goods and weaving their own cloth – rather than buying from the motherland – was one of the precursors of the British intransigence which led to the War of Independence in the first place.

War also shook up the European states.  Although French statesmen at the time believed that their economy was being eclipsed by the British, prior to the Napoleonic Wars both economies were roughly the same size.  It was the long drag of war between 1803 and 1815 which undermined the French economy while boosting the British – who did relatively little fighting, but loaned money to its various allies to do the fighting on its behalf.

Even this though, does not explain why Britain experienced the massive growth in coal-powered industry in the decades after the Battle of Waterloo.  One often overlooked reason – which also explains the composition of the “British” army at Waterloo – is that Britain had manpower shortages.  The Army which Wellington took to Belgium in 1815 included Dutch, German and Irish troops as well as several mercenary units.  But missing from the army was a large contingent of English soldiers:

“Wellington later said that he had ‘an infamous army, very weak and ill-equipped, and a very inexperienced Staff’. His troops consisted of 67,000 men: 50,000 infantry, 11,000 cavalry, and 6,000 artillery with 150 guns. Of these, 25,000 were British, with another 6,000 from the King’s German Legion (KGL). All of the British Army troops were regular soldiers, but only 7,000 of them were Peninsular War veterans.  In addition, there were 17,000 Dutch and Belgian troops, 11,000 from Hanover, 6,000 from Brunswick, and 3,000 from Nassau.”

And so – unusually – when the war came to an end, British employers faced labour shortages.

There were two broad approaches to the situation.  First – and easiest in a political system in which few people could vote – the elites sought to impose by statute the economic conditions which had prevailed prior to the war via prices and incomes policies.  These led to workers’ strikes and protests such as the 60,000 strong protest at St. Peter’s Fields in Manchester on August 16, 1819 – which would go down in history as the “Peterloo Massacre” after armed cavalry units were deployed and 18 demonstrators killed.

There was though, a less obvious but ultimately successful response to labour shortages.  In a word; Automation.  Taking advantage of the embryonic coal-powered steam technologies, investors could make huge returns on their capital by employing machinery to do the work previously done by humans.  And the returns were far from trifling.  The real trick to industrial capitalism is to understand the simple fact that it is energy rather than labour alone which is the source of value, but that the cost of each is in inverse proportion to the value they return.  The successful businesses of the age were those which employed workers as mere machine-minders rather than attempting to compete using puny labour power alone.

Ever since, “productivity” – the art of using technology to maximise the value generated per worker – has been the goal of corporations, governments and nations.  And it is why today’s post-pandemic labour shortages are being seen as a potential benefit by some, even as the establishment media and the political left demand a return to the low-paid economy of the neoliberal years.

Among the other ills of neoliberalism was the creation of a precariat of under-paid and under-utilised workers – including many migrants – to drive down wages.  In addition, poaching other firm’s and other countries’ skilled workers served as a substitute for investing in training.  As Jack Barnett at City AM notes in relation to the current lorry driver shortage:

“A shortage of skills has been endemic throughout the UK economy for quite some time now.

“The flight of EU nationals from the UK has exposed the pitiful level of qualified British HGV drivers, which has caused logistical nightmares for businesses up and down the country.

“Haulage chiefs estimate there is an around 100,000 shortfall of lorry drivers in the UK at the moment. And it may not be as simple as raising pay to clear this imbalance. ‘Where there are skill shortages, for example for HGV drivers, it will take time to get people trained up’…

“From the UK side, haulage workers are typically older and well-seasoned in their role. But, the sector has struggled to attract new candidates for decades.

“Younger workers have opted for work with more sociable hours, while the Covid crisis has disrupted training programmes, meaning distributing qualifications to drivers and getting them on the road has been delayed.

“So, while worker shortages in the leisure and hospitality sectors may be a short-term problem, solved by increasing pay and the end of the furlough scheme, a lack of lorry drivers could be a more persistent thorn.”

Barnett’s solution to this is productivity:

“Equipping people with skills and knowledge makes them more productive.

“If a greater share of the UK population has the means to improve their productivity, the economy will produce more with less, which will give businesses more cash to invest in creating new jobs, meaning they will not need to increase prices to offset higher costs.”

Indeed, this appears to be the gamble that the UK government is betting the house on.  Rather than take the politically expedient decision to allow the low-paid Bulgarians, Hungarians and Romanians back into the UK to provide the economy with a reserve army of cheap workers, the government is gambling that Labour shortages and rising wages will force businesses to invest in automation where this is viable, and skills training where it is not.  Moreover, since the government is also set to invest in its own version of a green new deal, the transition from a low-skilled and low-paid economy to a high-skilled and high-paid one appears assured… even if the immediate pain is real.

But can the first economy to industrialise really emerge as the leader in a new, green industrial revolution?  Most likely not.  Because for all that government, its economists and its cheerleading media may focus on green technology and high-skilled labour, neither is the source of the value that is required to drive such a revolution.  Energy has always been the driver of the modern world.  And fossil fuel energy in particular has provided us with so much surplus value that it literally enabled us to move mountains, fly across oceans, send people to the Moon and send probes out into interstellar space.  And the one thing missing in all of this green new deal-speak is a viable replacement energy source to generate the value.

It isn’t wind and solar – we saw what happened to those just last week, when a combination of high pressure air and persistent low-cloud forced the Grid operators to turn to coal to keep the economy running.  And no, adding more wind turbines and solar panels doesn’t solve the problem.  It just means that even more of them will be standing idle for several days in every month.  Nor does hydrogen cut it.  Although in theory hydrogen is three times as energy-dense as diesel, hydrogen itself is not dense.  Nor does it occur as a separate element on Earth, but must be either reformed from gas or separated from water via electrolysis.  Both processes – and the compression of the gas into a storable liquid – use up most of the potential energy, leaving little in the way of a surplus to power the economy.

Nuclear, again in theory, has an energy-density orders of magnitude greater than diesel.  Moreover, uranium and thorium are abundant and readily available around the planet.  But nobody really knows how to do nuclear.  Most of the reactors developed after the Second World War were as much to do with producing weapons as for producing electricity.  And so we have inherited eye-wateringly expensive and potentially explosive pressure cookers to boil super-heated steam to drive the same turbines that coal power plants have been using since the nineteenth century.  And we would need to build a Hinkley Point C every two days from now until 2050 if we wanted to replace fossil fuels with nuclear, whereas we actually build about one every decade.

So no, until someone can come up with a scalable and cheap energy-dense replacement for fossil fuels, no amount of wishful thinking is going to generate the high-skilled and high-paid economy that a growing number of commentators hope to create in the aftermath of the pandemic.  The massive and self-inflicted drop in energy implicit in the various versions of “building back better” can only result in demand for labour growing even as the wealth to pay for it is disappearing (either through inflation, market crashes or both).  It is true enough that in the future “you will own [almost] nothing…”  but it is unlikely that anyone is going to be happy about it.

As you made it to the end…

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