The document discusses the changing role of the state in Britain in relation to industrial policy and pensions policy in the post-crisis period. It argues that while the state's interventionist footprint has expanded in some areas like subsidizing private R&D and creating new pension markets, it intervenes in a "submissive" manner to support rather than shape private sector priorities and accumulation. The state frames its new actions as responses to "market failures" while also expanding tax reliefs and deregulation that were archetypal neoliberal policies. Overall the economic norms and institutional landscape have remained unchanged, but the state has taken on more public market-based governance functions to stabilize the accumulation regime during the crisis.
2. Growing literature on post-crisis policy continuity
and change, but unanswered questions on
‘statecraft’
• What kind of state is developing? (Or what kind of state are
we left with?)
• What institutional forms are becoming dominant?
• What is the (emerging) rationale for governance?
• How is ‘the state’ narrated and legitimated?
Need to answer these questions empirically…
3. • Literature on ‘growth models’ has strangely displaced state institutions
• So too has literature on everyday economy/financialisation (occasional
focus on very micro state action)
• Literature on neoliberalism’s resilience, variety, unfailure not focused on
state transformation
• Literature on ‘austerity state’ and ‘debt state’ started to articulate post-
or late-neoliberal statehood/statecraft, but only really tells us about
(part of) macro-economic policy
• Wider social science literature on local statecraft/‘scalecraft’ is useful,
but empirically narrow
Some massive generalisations about recent
political economy literatures…
5. Economic context
Industrial strategy
• Deindustrialisation (new phase
since crisis)
• Trade imbalance
• Productivity slowdown
• Low business investment rate
• Limited earnings growth since
mid-2000s
• Regional inequalities
• Brexit impact on TPNs
Pensions provision
• Increasing life expectancy (until
very recently)
• Low/volatile investment returns
• Decline of traditional DB sectors
(manufacturing, retail)
• Corporate restructuring
• Growth of financial services
• ‘Under-saving’
6. Recent developments – industrial strategy
1. Support for science reoriented towards ‘translational’
activities from mid-2000s
• Innovate UK (previously TSB), research councils, catapults, ISCF, patent
box
• Firms’ unwillingness to invest in R&D a ‘market failure’ (although patent
box corrects a ‘policy failure’)
2. Sector councils/deals revive ‘targeted’ industrial policy
• Model for automotive and pharmaceutical industries applied to any
self-defined sector. Typically involve R&D subsidy, training, planning
support
• Generally favours powerful incumbent firms. Mechanism for private
governance of a public good
7. Recent developments – industrial strategy
3. Devolution and local growth
• From RDAs to LEPs/deals/mayors – limited powers/resources, new
conditionality, reorientation of local govt.
• Regional inequality a market failure, but the solution (agglomeration)
is a narrative of policy failure
• Now local industrial strategy – effectively meaningless
4. Limited action on patient capital
• No action on Key review or patient capital. Coalition established British
Business Bank for SME finance – mimics private practice.
• Maintenance of venture capital tax relief – aligned with wealth
management practice
8. Recent developments – pensions policy
1. Introduction of soft compulsion in private pensions
• Automatic enrolment on DC basis (with huge increase in spending on pensions tax
relief, recast as a government incentive to save) – govt creating a ‘missing market’
• Scheme governance regulation very light-touch (inc millions of savers exist outside
TPR sphere in ‘group personal pensions’)
• George Osborne’s pensions liberation dismantles annuities market
• State pension recast as ‘savings platform’
2. New public institutions providing private pensions
• NEST as default provider for workplaces (and self-employed) private providers
cannot service – correcting market before it fails
• Wider role: ‘Best practice’ scheme governance as quality floor. Prominent role for
‘NEST’ in communication of wider auto-enrolment programme – regulation by
example
9. State role: industrial policy
Sector councils/deals Support business elite in acquiring and allocating public funds in key industries
LEPs Support business elite in acquiring and allocating public funds; promote local economy as
investment destination
Metro-mayors/LIS Co-ordinating multi-level and multi-agency governance; promote local economy as investment
destination
Innovate UK/UKRI, ISCF Correct market failure in translational research by subsidising private R&D; incentivising
universities to work with private sector
BBB Correct market failure in venture capital; offer finance sector expertise for SME community
State role: pensions policy
Auto-enrolment Correcting market failure in individual behaviour; creating missing (mass) market in personal
pensions
NEST Replacing a market expected to fail; showcasing good practice
PPF Provide pensions for members whose DB schemes have failed – effectively insurance scheme
for ongoing schemes
10. Submissive statism
• Neoliberal state? Perhaps more helpful to think of
neoliberalisation as a completed project, which frames new
forms of state action in response to accumulation crisis
• Economic norms and institutional practice essentially unchanged.
But market-based governance becomes slightly more public,
because stability of accumulation regime is threatened. The
backstop state?
• ‘Market failure’ is a key framing of new statecraft. Now
encompassing larger scale interventions in new areas, and pre-
emptive failures of markets established by the state – policy
challenges understand as the absence of a market
11. Submissive statism
• ‘Policy failure’ sibling present too:
• Expansion of tax reliefs and deregulation – archetypal neoliberalism
• But also ‘state capture’ as a public policy objective, and expanded local
developmental state prefaced by limits and illegitimacy of intervention
• Where the state must intervene, it should mimic (failed) private sector
practice
• State paradoxically has larger interventionist footprint. But it
intervenes submissively to support, not shape, accumulation
• Some new ‘institutions’ amount to publicity initiatives around
highly voluntaristic interventions