Paying for the Good Stuff

Let’s be honest: Was anyone’s first reaction on seeing this photo to wonder about the positive role sociology might have on industry or production?

I recently attended the annual lecture of the Academy of Social Sciences in London, which was given by Andy Haldane, chief economist at the Bank of England. The lecture was a fascinating journey through the problem of industrial productivity in the UK, as seen through the lens of economics. In the way of much economic analysis, it offered a compelling statement of a problem – but struggled to find an adequate solution.

It has long been recognized that productivity growth in the UK lags behind that of many of its major competitors. This trend goes back at least to the late 19th century when the ‘first industrial nation’ began to face serious international challengers from Europe and the USA. A great deal of economic and historical effort has been devoted to analyzing the puzzle. The new information from the Bank of England reflected an attempt to generate data at firm and regional level rather than just looking at the problem in the aggregate.

In summary, the leading 0.1 percent of companies in the UK are as productive as those anywhere in the world – but there is nothing behind them. A long tail of firms just about manage. They cover their costs, provide a decent living for their directors and shareholders and something a little better than minimum wage for their employees. They are not true zombies, ready to collapse as soon as their bank calls in their credit facility, but they are stagnant and apparently without ambition to improve their competitiveness.

Andy Haldane

Why does this matter? Well, as Andy Haldane pointed out, it is productivity improvement that pays for investments in social infrastructure and rising living standards. Unlike our competitors, the UK economy has seen no real progress since the crash of 2008. As a nation, even before the national self-mutilation of Brexit, we are no better off than we were 10 years ago, while Germany, the Nordic countries and the USA rapidly returned to their previous patterns of growth. If we want to achieve the levels of investment in health and social care, education, transport, housing and the like that are taken for granted elsewhere, something needs to be done.

The question, then, is what? For some of the Brexiteers, leaving the European Union is intended to provoke a disruptive shock to the UK economy that will force change, much as did the Thatcher reforms of the 1980s. The true zombies will be despatched and the near-dead will be forced to change or die along with them. Andy Haldane implied that the Bank of England would be reluctant to advocate such a policy. The ‘just about managing’ firms employed most of the UK workforce and no responsible policy maker should favour unemployment on the scale that would result.

This, of course, is the point at which conventional economic thinking runs out. If these firms responded to ordinary market incentives, there would be no problem. Tax allowances, grants, organizations to promote the ‘development’ part of R&D have demonstrably failed to achieve the purposes for which they were created. The long tail do not see the need to move out of their comfort zone.

Fundamentally, the problems of the UK economy are social and cultural. For some reason, UK businesses are not driven to improve their productivity in the same way as their competitors. Economics has no real explanation for this. It is the world of ‘animal spirits’ in Keynes’s analysis, a residual term for the non-rational factors that shape market actions in ways that are incomprehensible to classical, or neo-classical, economics. This is precisely the territory of sociology and anthropology. It should be our bread and butter. Once upon a time it was.

Sociology departments, and their students, are left with a rump of grievance studies.

When I was a lad, sociology departments routinely taught a course on ‘industry’, ‘work’ or ‘economic life.’ Most of this turf has now been abandoned to business schools in the form of organization studies, where it increasingly struggles to resist the expansion of finance and accounting studies. There are structural reasons for this – sociologists who study these topics find that business schools are a more buoyant job market, pay better and offer more resources to support research.

However, I suspect that the cultural reasons are more important. What are sociology departments preoccupied with these days? Observably, it is the search for a Utopia of social justice, as defined by self-styled ‘public sociologists.’ There is an endless recycling of studies of minority and marginal social groups, documenting forms of social exclusion and advocating a redistribution of attention and resources to address these. What there is not, is a consideration of how those resources were generated in the first place and how we could generate more of them. Indeed, in many departments, there is a positive suspicion of wealth creation, technology development or user experience studies. It is striking how many bright young sociologists are now building careers in computer science, design or engineering departments or being hired into fields like innovation studies or human factors. Sociology departments, and their students, are left with a rump of grievance studies.

It is time for sociologists to remember that the good stuff has to be paid for. Our contribution to the moral evaluation of society is an historic and important one – but it is not the only one that we have to make. Social and economic justice are not simply matters of distributing the existing pot: they are also crucially affected by how we might make that pot bigger. Industrial productivity matters to the people we claim to be concerned about and the public services that they draw on. It should be as big a part of our agenda as it is for our neighbors in economics.