The politics of the British model of capitalism’s flatlining productivity and anaemic growth: Lessons for the growth models perspective
| Author | Ben Clift,Sean McDaniel |
| DOI | http://doi.org/10.1177/13691481211044638 |
| Published date | 01 November 2022 |
| Date | 01 November 2022 |
| Subject Matter | Original Articles |
https://doi.org/10.1177/13691481211044638
The British Journal of Politics and
International Relations
2022, Vol. 24(4) 631 –648
© The Author(s) 2021
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DOI: 10.1177/13691481211044638
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The politics of the British
model of capitalism’s flatlining
productivity and anaemic
growth: Lessons for the growth
models perspective
Ben Clift1 and Sean McDaniel2
Abstract
This article assesses the usefulness of the growth models perspective for understanding
contemporary British capitalism in the context of its ongoing ‘productivity puzzle’ and stagnating
economic growth. The analysis of British capitalism supports our argument that growth models
perspective analyses currently have limited capacity to understand the developmental trajectory
of growth models, the instabilities and dysfunctionalities of these models, and how growth comes
to be distributed differently across models. Through analysis of capital investment patterns and
labour market characteristics, it reveals the importance of the ‘politics of productivity’, embedded
in state institutions, which shapes the nature and distribution of economic growth. The article
outlines a new framework for growth models analysis that ‘brings the supply-side back in’ for a
more holistic approach to the political economy of capitalist growth (and non-growth). It argues
this is critical for understanding patterns of political economic development in the British model
of capitalism and beyond.
Keywords
British capitalism, comparative political economy, growth models, investment, labour markets,
productivity puzzle, varieties of capitalism
Introduction
The British model of capitalism is an important case within comparative capitalism debates.
The Comparative Political Economy (CPE) literature traditionally understands the British
model as a ‘liberal’ or ‘market-led’ economy (see Coates, 2000). British Political Economy
scholarship, particularly since 2008, fleshed out the British model’s reliance upon financial
1Politics and International Studies, Warwick University, Coventry, UK
2Future Economies Research Centre, Manchester Metropolitan University, Manchester, UK
Corresponding author:
Sean McDaniel, Future Economies Research Centre, Manchester Metropolitan University, Manchester M15
6BH, UK.
Email: s.mcdaniel@mmu.ac.uk
1044638BPI0010.1177/13691481211044638The British Journal of Politics and International RelationsClift and McDaniel
research-article2021
Original Article
632 The British Journal of Politics and International Relations 24(4)
capitalism to support economic growth. For several decades, increasing private debt, espe-
cially consumer credit fed by house price inflation, propped up the faltering model as real
wages and living standards stagnated (see Crouch, 2009; Hay, 2009; Watson, 2010). More
recently, CPE scholars developed a new ‘growth models perspective’ (GMP)1 (see Baccaro
and Pontusson, 2016), focused on key demand drivers of growth. This important work has
shifted focus away from Varieties of Capitalism’s (VoC) firm-focused, supply-side approach
(Hall and Soskice, 2001) which dominated earlier comparative capitalism work. GMP
draws upon and dovetails with elements of British Political Economy scholarship to pro-
duce a coherent image of the British economy’s ‘growth model’. Britain’s ‘consumption-
led’ (as opposed to ‘export-led’) model is fuelled by both real wage growth and high
household debt (Baccaro and Pontusson, 2016: 176). This article assesses the utility of this
GMP framework for understanding British capitalism’s evolution, using this to shed light
on wider CPE debates about ‘growth models’ (GMs).
Empirically, British capitalism presents an interesting dilemma for comparative schol-
arship and GM analysis, given its ongoing so-called ‘productivity puzzle’ (PP). Britain’s
acute lack of productivity growth since the early 2000s is not readily explained by any
single factor or thesis. The PP is a broader international phenomenon, yet Britain’s pro-
ductivity shortfall is twice as severe as other G7 economies (Sidhu, 2018). Some esti-
mates suggest that productivity growth is 19.7% below its pre-2008 trend, a slowdown
unprecedented in 250 years (Crafts and Mills, 2020). Enduringly, low productivity since
the mid-2000s and sluggish growth since 2008, features apparently baked into the British
economy, throw up a paradox. Contemporary CPE scholars increasingly focus on, and
delineate, ‘models’ of growth within 21st-century advanced capitalisms, yet these politi-
cal economies are characterised more by instability, crisis and stagnation than by growth.
‘GM’ analysis has flourished just as capitalist growth itself has largely deserted advanced
economies. We utilise the British case, and the PP, to explore the implications of this for
comparative capitalism debates and GM analysis.
While GMP scholarship has contributed valuably to our understanding, the British
case reveals the need for a more holistic approach to the political economy of capitalist
growth (and non-growth). Myopically focusing on national models of growth may dis-
tract from important uneven distributional characteristics and regional disparities within
capitalisms. Furthermore, GMP’s understandable turn away from VoC’s supply-side
insights commits the opposite but equally significant fallacy of prioritising demand driv-
ers of growth at the expense of the supply-side. The GMP overlooks ‘the politics of pro-
ductivity’, that is, the set of contingent rules, norms and ideas bound up within the state
that shape supply-side evolutions of the economy, affecting growth trajectories.
We focus on the influential GMP framework as a key intervention in comparative capi-
talism debates. GMP, we argue, contains key analytical and assumptive weak points that
pose problems for understanding capitalism comparatively, in Britain and beyond. These
assumptions circumscribe GMP’s ability to understand the developmental trajectory of
GMs, the instabilities and dysfunctionalities of these models, and the dynamics of how
growth is distributed differently across models. GMP scholarship not only overstates the
coherence of GMs, but it also misses the contingency, haphazardness and path dependen-
cies that shape capitalist development. Taking a longer view reveals how GMs are a dia-
chronic phenomenon, and snapshots offer too fleeting a glimpse of political economies.
We apply sectoral and geographical analyses to the British case, examining how capital
investment and labour market dynamics affect the PP. The GMP struggles to understand
the nature and developmental trajectory of the British political economy, crucially
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