The Manchesterism Movement: A New Vision for Britain's Economy
The 2008 financial crisis exposed a critical flaw in our economic system: the failure to recognize the interconnectedness of individual risks and their systemic impact. This realization led to the macroprudential approach, which focuses on addressing system-wide instability at its root causes. However, a decade later, Britain's supply-side economy remains stuck in a pre-2008 mindset, leading to a compounding crisis.
The current system, with its fragmented regulation and market-driven approach, has resulted in high energy prices, deteriorating services, and a housing crisis. It's a state-market hybrid that fails to address the underlying issues, leading to price distortions, excessive profits, and chronic underinvestment.
The Productive State: A Bold Solution
The solution lies in the concept of the 'Productive State,' a public institutional architecture designed to intervene at the core of the supply-side economy. This approach, exemplified by Andy Burnham's Greater Manchester program, aims to deliver affordability and economic dynamism by regaining public control of essential services.
The program's success is not just about tackling the cost of living crisis but also about building a more inclusive, resilient, and democratic society. It's a political project that challenges the conventional binary of market coordination and welfare state redistribution, offering a third pillar of political economy.
The Privatization Paradox
The privatization of essential services has led to a pathology where extraction takes precedence over investment. Private ownership in foundational sectors like energy, water, housing, and care has resulted in rent extraction, underinvestment, and the transfer of risk to those least able to bear it. This is a systemic issue, as demonstrated by scholars like Brett Christophers, JW Mason, and Isabella Weber.
The public's pessimism about the cost of living crisis is not unfounded. High costs for essentials squeeze household budgets and put upward pressure on public spending. Welfare transfers become a band-aid solution, failing to address the root causes. The existing policy toolkit, including income transfers and regulation, falls short because it treats symptoms without addressing the structural issues.
The Power of Public Ownership
The Productive State offers a transformative approach by investing public money into public assets for public provision. It intervenes in production, not just distribution, and provides sovereignty advantages in price, supply chain, and ownership. This model, already successful in countries like the Netherlands, delivers lower bills and better services by eliminating the privatization premium and reducing coordination frictions.
The criteria for intervention are clear: productivity exhaustion, systemically significant prices, investment strike, social need, and public policy goals. These tests identify where private ownership fails, and the convergence of these factors in Britain's essential sectors is not a coincidence but a structural consequence of privatization.
Manchesterism in Action
The success of the Greater Manchester program is evident in its public transport experiment, the Bee Network. Passenger numbers have risen, routes have expanded into underserved communities, and fares are capped at affordable levels. This model demonstrates that public control of essentials reduces costs and fiscal transfers, making it a fiscally prudent approach.
The potential for expansion is vast, with national corporations for network infrastructure, regional and municipal authorities for transport and housing, and municipal providers for care and local services. This decentralized, plural, and democratically accountable approach is already gaining traction in various sectors, showing that Manchesterism is not just a theory but a practical solution.
Overcoming Objections
The objections to the Productive State agenda are primarily fiscal, institutional, and political-economic. However, these concerns are addressed by the success of similar models in other countries, the British state's ability to build effective institutions, and the latent constituency of workers, communities, and businesses who have borne the privatization premium.
A Choice for Britain's Future
Britain stands at a crossroads, with three paths ahead. The first, external expansion, leads to geopolitical tension and conflict. The second, stagnation, results in low investment, high unemployment, and slow growth. The third, the 'somewhat comprehensive socialisation of investment,' as Keynes called it, is the path of the Productive State and Manchesterism.
This path offers macroeconomic stabilization, abundance through coordination, and security through decommodification. It envisions an economic system with three tiers: a decommodified foundation of essentials, a stabilized market middle, and an innovation frontier. This system empowers entrepreneurs and workers, expands freedom, and ensures shared abundance.
The choice is clear: either continue with the status quo, leading to further crises, or embrace the deliberate path of the Productive State and Manchesterism, driven by public ownership and democratic control. This is not just about cheaper bills and better infrastructure but about building a fairer, more resilient, and democratic society. The time for transformation is now, and the public's demand for change is evident. The challenge lies in translating this demand into political action, which requires courage and a strong movement.
