“A systematic process of economic development that is uneven in space and time, and endemic to Capitalism.”
(JOHNSTON, 2000)
Marx outlines the principles this stems from, arguing that capital accumulates in one place, because it has been lost in another. This process of accumulation causes the regional problem, which can be broken down as follows:
- Economic inefficiency
- Social inequibility
- Environmental damage
- Political instability
Much of the early regional policy failed to address the latter three issues and simply aimed itself at the economic aspects of the problem. The process of uneven development is highly dynamic, as production evolves, the patterns of unevenness transform, resulting in changing policies to combat the problem. (JOHNSTON, 2000)
The State?
The State can be defined as follows:
“..Traditionally regarded as an area of land with relatively well defined, internationally recognised, political boundaries.”
(JOHNSTON, 2000)
The state has a variety of roles all have an economic impact on the regional problem. The state is a regulatory and interventionary body along with providing services for society. (JOHNSTON, 1982) It is one of the largest employers in the UK, covering everything from teachers to Members of Parliament. The multiplier effect generated by government spending can indirectly create employment, in particular there defence spending. With unemployment being a key area of the regional problem it is crucial to note the potential impact the state can have on this issue.
The question why does a Capitalist society need the state? Needs to be pondered, it is not simply just an idea that has been inherited as the state has not only survived but it has evolved and grown. The theory behind its existence lies in Marxist thought. Clark and Dear argue (1981) that the state is a necessary part of the capitalist mode of production. Marxist theories view capitalism as passing through a series of crisis’s the final consequence is a revolt by the proletariat, and the transition from capitalism to socialism. The revolt has yet to occur due to state intervention. (JOHNSTON, 1977) Marx also see the state as the instrument of the ruling class, therefore in his eyes the state can never be an impartial arbitrator. In opposition to this the Neo Classical viewpoint identifies the state as just that, and impartial arbitrator in a mixed economy. It recognises that there is no such thing as a free market and that all markets are restricted by some red tape. Within in this theory the state works in the public interest to ultimately correct market failures, there policies aim to make markets more efficient. The Neo classical theory most succicinctly sums up the role of the state in the modern economy, however Marx is correct in the fact that personal interests of government will always have a role in state policies.
The state as seem above intrudes into many aspects of economic and social life; the intrusions reflect the aims and beliefs of the relevant government in a particular time or place, so must obviously change with changing governments. The extent of the intrusion is usually measured by the size of the state budget, relative to GNP. In most states this budget has increased substantially over the recent decades. Rose (1977) suggested a three fold typology of the expenditure:
- State purchases from private capitalists, i.e. Military hardware
- Transfer payments between groups in society, i.e. Taxpayer to subsidised farmer.
- State provision of services.
There has been pressure for the role of the state to change over time due to the continuing process of Globalisation and the impacts this has had on the British economy both internally and externally. The crisis of Fordism, introduction of new technologies has resulted in changes in economic and political thought. Ultimately increasing pressure for change, the result has been a hollowing out of the nation state. With the rise of both the Scottish and Welsh Assemblies and emergence of supra national bodies such as the European Union. Both of which have had an increasing influence on regional policy within the UK. The question over whether the states role has become diminished with the emergence of this bodies, is what I aim to answer within this paper.
One nation politics, 1945-1975
One Nation politics embraces:
“the creation of an inclusive social democratic politic and the narrowing of socio-spatial inequalities”
(HUDSON, 1997: 17)
Here a transition from a liberal state into an interventionist took place. State activities now had extended boundaries and followed the Keynesian school of thought:
- A commitment to full employment
- Maintenance of aggregate demand
- Extensive welfare system
This new management of the economy involved the nationalisation of industries such as coal and transport. Along with the establishment of new town and country planning, and intervention of a welfare system. With the greatest symbol being the emergence of the National Health Service. (HUDSON, 1997) All of this had the impact of expanding the economy especially in regards to public sector employment. While the employment issue was temporarily solved the introduction of a welfare state made those unemployed lazy, there was no need to work if they could live off the state this is perhaps reflected in the later downturn in the economy. The second area that left cause for concern was the emergence of strong trade unions. Areas such as the Northeast, continually epitomised as an area with regional problems, become characterised as a state managed area. Under the umbrella of the UK’s version of Fordist accumulation, with a particular regional institutional arrangements. (HUDSON, 1997) Most obviously characterised by the growing strength of Trade Unions. Strong trades unions put constraints on growth; as they are able to force up wage rates in tight labour markets, which cannot then be reduced in time of a downturn in the economy.
The 1950’s full employment along side a profitable private sector meant the regional problem was not an issue. However with the narrow economic base it became increasingly obvious that peripheral areas were unstable and vulnerable, especially within and competitive international division of labour. These weaknesses were noted and by the mid 1960’s regional disparities were very visible. With problems in the national economy the state tried to address both issues with the same policies and action destined for disaster. As the problems were on completely different scales. It sought to bring about non inflationary national and regional balanced growth via a stronger central government regional policies, new regional institutions (RDA’s), and sectoral policies with the aim to modernise the economy. The policies failed due to the open nature of the UK economy, and pressures from international markets. (HUDSON, 1977) The governments ability to maintain full employment and a full welfare state disintegrated with these policy failures, adding to this was the Break down of Bretton woods arrangement for a fixed currency and the UK was truly opened up to the global economy. Balanced growth cannot be achieved under the conditions created in One nation policies. The failure of regional policies in this era may be partially due to the fact that many of the policies were derived from the Barlow report (1944) Which was the ever changing regional problems had become some what out dated.
Mid 1970’s saw the real emergence of the North-South Divide. As the weakened regional policy resulted in divergence. The conservative government favoured the Neo liberal school of thought allowing Market forces to rule as opposed to policy. Therefore growth continued to occur with the South, while the North experienced Deindustrialisation with the privatisation and deregulation of the British economy. Ultimately leading to a crisis in the British Economy’s Balance of Payments and the chancellor, Dennis Healy, having to take out a loan from the International Monetary Fund. (MOHAN, 1999)
Two nation politics, 1979-1997
It was clear by 1975 a new mode of regulation was required and so came the transition to Two nation policies, with full economic crisis on the horizon. A neo liberal policy was introduced as opposed to Keynesian. With the introduction of a different school of economic thought those areas with a narrow specialised industrial base were set up for a fall. The spatial divisions of labour meant that many parts of the UK were hit with severe economic depression with the period of deindustrialisation. (JOHNSTON, 1977) with large numbers of unemployed within the peripheral areas this created a huge problem for government, especially as negative multipliers began to take place. Two nation policy was a response to the UK’s accelerating decline, and its dominance will forever be due to Thatcherism. State policies became highly visible under Thatcher, especially their effect on the regions.
The change was immediately noticed in the Welfare sector, with Thatcher dismissing the ‘nanny state’. A cut back in the welfare state turning the UK into what Schumpeter describes as a ‘Workfare state’. However this idea of ‘workfare’ was experimental and unstable, and with the economy on the brink of fiscal disaster could only result in increased disparities between regions.
It was thought that opening up the UK’s economy to market forces would help to recover the economy. However processes such as Deindustrialisation, Privatisation of major industries such as the steel industry hit those areas on the periphery the hardest. And combined with rapid service sector growth resulted in huge regional disparities, this decade saw 4-6***** growth a year within the South east. While old industrial areas suffered decline. With the narrow economic bases, the opening up to a free market caused unemployment, industries closed in the peripheral areas, due to their inability to compete in the globalising world economy.
Table 1: Unemployment: North Region and Great Britain 1978-97 (annual averages)
(GIBBS, JONAS, REIMER, SPOONER, 2000:27)
The table shows how employment in the North region suffered during Thatcher’s one nation policy. British industry simply wasn’t efficient enough. Thatcher’s ideas of opening up the market to make these industries more efficient in theory was ideal. However in reality it resulted in downward multiplier effects in those areas reliant on the industry. With the downward multipliers it became impossible for the region to recover without some form of state assistance. It was a significant shift for the boundaries between state and market (HUDSON, 1997). Jessop (1994) refers to this as a hollowing out of the nation state, as with the ascension of the UK into the European Union some power was transferred upwards. No power was transferred to the regions; there was little decentralisation within the UK. Globalisation policies, noted for there uneven tendencies were given free reign in the UK.
Third Way and hollowing out of the nation state
The landslide victory of Labour in 1997 brought Tony Blair to power and resulted in yet another change in direction for regional policies. The ‘Third way’ has also been described as ‘Blairism’, and stems from Anthony Giddens ideas. The suggestion has been made that both right wing and left wing policies have run out of steam. The ‘Third way’ sits some where in the middle of the two previous ideologies recognising the need for welfare, but also the need to encourage those unemployed that employment is better than welfare. It has set out rights and responsibilities for the public, and government. There is a process of de-statization of the political system, reflected in the shift from government to governance (JONES, 2001) This simplified is the movement of power downwards as opposed to the shift of power during Two nation policies upwards. Local authorities and regional organisation have gained more control yet without lose of control from the nation state. (GIBBS, JONAS, REIMER, SPOONER, 2000) There is a decline in direct management by the state on economic and regeneration programmes across the UK. This devolution of power is prominently seen in the creation of the Scottish, Welsh and Northern Irish assemblies, and the election of a mayor for London. At the same time a range of local governments roles are being contracted out to the private sector and non elected QUANGO’s, following Thatcher’s idea of utilising the private sector to boost the regional economies but in a more managed sense. There has been an increasing prominence of partnerships, an example of which being the Tyne and Wear partnership.
While this idea is on paper a very logical one and looks far more promising than the previous one nation and two nation policies when it come to remedying the regional problem it still has its negative side. These partnerships still have to answer to central government, and the non elected groups still have private interests that are like to come before the greater good of the region they work within. However there has been a change in the regional problem with the convergence to some extend of the traditional North South divide, the problem is now much more interregional therefore the devolution of control to local authorities has definite positives as they are able to some extent to control their own problem areas such as inner cities as address the issues that affect the area in particular. This devolution is meant to provide more accountability and with it being still in its infancy the positive or negative effects have yet to been seen. The biggest critcism is that it relies on co operation between a number of differing organisations, with the state as the arbiter.
Devolution has also continued to occur on an international level, as the EU has continued to intervene in regional problems within the UK. However EU funding though given out to various regions in the form grants etc. it still comes through central government, and is dispensed to the Government offices for the Regions. This can be seen as problematic for those that view devolution as the way forward as it allows continued supremacy of the national government. (GIBBS, JONAS, REIMER SPOONER, 2001)
Conclusion:
The changing nature of the state can be in all cases related to both internal and external causes, on of the biggest being globalisation. The profound changes in the role of the state and geography of the UK have been associated with Jessop’s (1994) idea of the tendency of Nation states to be ‘hollowed out’. (HUDSON, 1997) Regional changes and changes in policy are both a product of and a condition for wider restructuring of the UK state and it relation to economy and society, within the UK and around the globe.
Within in this paper it has been outlined that there is a definite need for spatial policy and the Neo Liberal school of thought on market forces correcting regional disparities can be easily disproved. An example being the exacerbation of the uneven geography of development during the opening up of the UK economy to the free market during the Thatcher years. It has been established that the state is a vital body, and has played a key if not defining role in regional policy. Capitalist countries require a state and some sort of market boundaries if growth is to be sustained and more importantly balanced. The nature of state involvement varies hugely over time and with varying governments. State intervention is never unproblematic but some policies create more problems with regard to regional problems than they solve.
Some governments, follow left wing policies such as the early |Labour and conservative government of the one nation policy era. One nation politics was simply too left wing with over ambitious ideas, full employment cannot be sustained within the UK’s economy, due to the cycles of boom and Bust described by Kondratievs long wave theory. It was unfortunate that the external factors played a large part in the failings of this policy. It didn’t protect the UK economy enough from the open markets, and in its race fro growth, forgot about stability. Trade unions and the effects of open markets were the key factors bring about the demise if this policy. The government perhaps didn’t intervene enough and let the trade unions have too much power. The welfare state didn’t encourage entreperuialship. Much of the regional policy during this era was derived from the Barlow report, which by the end of the era was 2 decades old, there was a lack of initiative to look at the regional problem in a new light and except that the regional problem had evolved as had policy.
The Thatcher government prefer the strong right wing neo liberal stance. However the approach was too right wing for the UK’s regions, while the economy started to make a recovery disparities grew. Thatcher’s autonomous power over the states only proved to exacerbate the disparities. Though regional development agencies were set up and some power devolved to the EU central government was the key factor in all decisions, the economy as a whole came before the regions. There was no accountability within the regions.
State intervention varies over time but it can be seen that the state has evolved with society as a central element to modes of production. This evolution has lead on to Blair’s ‘Third Way’ the impacts of which are yet to be seen. Though it has the potential to create more balanced growth with the co operation of all parties involved in the complex structure within regions. And most importantly sustainable development, growth that won’t spiral out of control and is environmentally friendly. This has seen varying degrees of success, in its various roles in easing towards a solution of the regional problem. Disparities will be an on going characteristic of the UK’s economic geography, due to the fact we are a capitalist society. There will always be a distinction between the classes as laid out in Marx’s theory, while there is growth in one area, there must be decline in another. However minimising the decline in areas such as inner cities is imperative. Devolution of power governance to take place and gives the regions a fairer chance to redevelop and have a say in their development. It also provides greater accountability. Though as seen by the cartoon below the state still retains central power, and will not let devolution evolve out of control:
(SELDON 2001)
The caption is ‘Sunday 12th march I took my little charges for a walk. Oh how I love to see their angelic faces smiling back at me! How shall I ever be able to let them go?..’ The babies in the pram represent London, Scotland and Wales.
Blair looks to be heading towards a Stakeholder society, within which there is governance and still a central state with main control. But QUANGO’s and local authorities have more control over their regions providing for the precise needs of each individual region and being accountable for that region too. Tony Blair has devolved power but not to the extent it may appear he is still very much in control of the regions and central government in all cases will have the last say. But The regional offices should mean that policies can be more tailored to meet needs. Co operation is required, and so is time, as only then will the true effects be seen. But so far the policy looks to be one that provides stability, though as with all policies it does have its potential failings. The suggestion that devolution of the regions such as the North East would mean devolution of the poor would simply not be the case. As the central state still retains a large influence and control over the devolved Scottish and Welsh assemblies. Devolution gives the regions more of a say in there future and puts them in control of their destiny after all only those experiencing the problems have the true capacity to assess policies and recommend future solutions. Hollowing out of the nation state is a good thing as long as central state still retains some control over the devolved areas. It seems to be the only way to achieve the sustainable development of the regions that both one and two nation policies failed to achieve.
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