The upas tree: the over-development of London and the under-development of Britain.

Author:Henderson, Jeffrey

The problem with Britain is that it is dominated by a single city: London. In other countries with highly developed economies and societies, political, cultural and economic power is dispersed: think, for instance, of Frankfurt, Hamburg, Munich and Berlin; New York, Chicago, Los Angeles and Washington DC; Toronto, Ottawa, Montreal and Vancouver; Milan, Turin and Rome. Indeed, with the principal exceptions of France and Japan, the vast majority of the world's major developed economies (as well as its 'rising powers': China, India and Brazil) have similar spatial dispersals of power. This is so because, unlike Britain, they are federal states.

The historic concentration of power in London--exacerbated by its emergence as a finance-driven 'global city'--has led directly to the sorts of attitudes expressed in recent years by its political leaders. Witness its Deputy Mayor for Business, Kit Malthouse, arguing in September 2013 that it would be more beneficial to the economies of Scotland, Wales and Northern Ireland if their governments spent their tourism budgets on promoting London, rather than their own nations (Boffey, 2013). In this, Malthouse was merely echoing his boss, London Mayor, Boris Johnson, who a year earlier had suggested to The Huffington Post that 'a pound spent in Croydon is of far more value to the country than a pound spent in Strathclyde' (Guardian 29.4.2012).

Putting to one side the metropolitan arrogance vis-a-vis the British nations (and, implicitly, English regions) that these suggestions reflect, they expose the trickledown notions that underlie much mainstream thinking (of whatever political stripe) about London's economic relations with the rest of the country. What's good for London is good for Britain!

That conception, however, is highly contentious. The argument developed here starts from a more adequate understanding of reality and mobilises the Indonesian upas tree to symbolise London's relation to Britain. The upas tree is a plant whose widespread branches produce a toxic sap that kills off anything that attempts to grow beneath them. London, historically but especially today, seems to have acted like the upas in respect to the rest of the country (1). Economically, politically, socially and culturally, London has become grossly over-developed and a consequence of its development process has been the systematic under-development of the rest of Britain. While London has helped to under-develop the British nations and regions asymmetrically, in England it is the North that has been most affected.

This article presents evidence to support the argument that London's over-development and Britain's under-development are two sides of the same coin. In so doing it focuses particularly on the North of England. It argues that while the dire economic circumstances of many of England's regions and Britain's nations are associated with the grossly unbalanced structure of the British economy, the latter is, in itself, a function of the centralisation of the British state. It goes on to investigate the regional consequences of state centralisation and ultimately argues that any prospect of substantial and sustainable economic rejuvenation in the regions and nations (whether or not Scotland remains in the union (2)), will depend on the re-formation of Britain as a federal state.

London and British under-development

Metropolitan and British government spokespersons undoubtedly would agree that parts of Britain are 'under-developed' relative to London and the South East and, in the context of England, would probably dress this up in the language of the 'North-South divide'. They would be quick to point out, however, that London is the economic powerhouse of Britain and thus essential to national prosperity. Indeed, there is plenty of evidence to suggest they would be right.

For instance, if we take gross value added (GVA measures the contribution of an individual producer, industry or sector to the UK economy) as a rough proxy for regional economic vitality, then we can see from Figure 1 that in 2011 London accounted for 22 per cent of the British total while, for instance, the North of England (that is, the North East, North West and Yorkshire and Humberside taken together) accounted for 19 per cent and the Midlands (West and East together) for 13 per cent (3). Not much in it one might think, at least between the North and London, until we realise that the North, with a population of nearly 15 million, has around 83 per cent more people than London (population, 8.2 million). Consequently London has a far higher GVA per head of population than the North (or, indeed, than anywhere in the country). There are good reasons for this--the higher proportion of people in the most economically productive age groups (partly thanks to London's migrant workers) and generally higher levels of education being among them--but they do not fully explain the significant discrepancies involved. And if we reverse the logic implicit here, we can see how the North's GVA/economic vitality in relation to its population size, is in fact a measure of the North's (and in varying degrees the rest of the country's) economic under-development relative to London.

So what are the reasons for regional under-development? Unless we assume that the peoples of the North, Scotland, Wales, the Midlands, the South West etc. are lazy and congenitally less intelligent than their London counterparts, there are three key questions that need to be asked: how did this economic under-development occur; what are the processes that reproduce it today; and what should be done about it?

Social and political origins of our current condition

In our references to London we need to make it clear that throughout this paper our concern is not with the vast majority of London's population. Some of that city's communities are as economically and socially dispossessed as any in the country. Our concern is with a particular social class configuration that is spatially rooted in London and its immediate hinterland and that has come to dominate Britain's economic, political and cultural life. Our analysis begins with the historical origins of that metropolitan class configuration.

In their book, British Imperialism, Peter Cain and Tony Hopkins (2002) show that from the late seventeenth century through to the 1960s and beyond, the fortunes of London's economic and political elites were inextricably linked to Empire. Coming from the same class backgrounds (aristocratic and upper middle class) and educated at the same private schools, they emerged as 'gentlemanly capitalists' seeking the quick and easy routes to wealth afforded by the opportunities for financial and commercial speculation that was the British Empire. Not for them the hard work of industrial entrepreneurship with its benefits only in the longer term. That was for the 'strange' people (with even stranger accents) from Wolverhampton and Bolton and from Doncaster, Sunderland and Greenock.

Though the British Empire was fatally weakened by the legacies of the Second World War and killed off in the 1950s and 1960s, the penchant of London's economic elite for financial and commercial speculation was not. On the contrary, it went from strength to strength as London became a global city and financial services, in particular, became proportionately an ever more important component of its economy. Kept in check by national and international controls on currency and investment flows until the early 1980s, London's banks and other financial institutions were released by the Thatcher government--and every succeeding one--to help build, not merely in Britain but worldwide, what Susan Strange (1986) termed 'casino capitalism'. Inherently unstable and destructive, privileging wealth and greed over all other values and dubbed 'socially useless' by the former head of the Financial Services Authority, Adair Turner, by 2008 its consequences were laid bare for all to see.

London-centred financial services had played a key role in the decline of Britain's industrial base (those economic sectors essential to the vitality of the Midlands, the North, Scotland, Wales and Northern Ireland) long before the onset of Thatcherite neo-liberalism. Though not the only destructive corporate influences, as Best and Humphries (1986) show, from the late nineteenth century through the inter-war period, when British manufacturing companies were coming under increasing pressure from US, German and other competitors, British financial institutions because of their obsession with short term profitability--refused to become engaged in helping to drive the long term industrial restructuring that was needed:

'(It) was in its inability to become a dynamic force in the reorganisation of basic industry that, in comparative and relative terms, the British financial system "failed"' (Best and Humphries, 1986, 237).

To this failure we might add another: the failure of successive British governments--both before and after 1945--to encourage and ensure that financial institutions became committed to helping build the long-term (and necessarily innovation-driven) competitiveness of the British economy. This certainly happened in the US, Germany, France and subsequently Japan and South Korea, among many others. So why not in Britain? Why, in other words, have our governments allowed British financial institutions, over a considerable period of time, to engage in investment decisions and practices that are contrary to the interests of the vast majority of the population (and, as such, are essentially unpatriotic)? The answer, in part, lies in the peculiarities of the configuration of elite...

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