One of Margaret Thatcher’s grimmest legacies was, in Seumas Milne’s resonant phrase the ‘pulverising deindustrialisation’ of Britain. This was achieved in part through the forcible destruction of entire industries, but it was also a product of Thatcher’s alignment of Conservative government policies with a narrow fraction of the ruling class centred on finance capital in the City of London.
For much of the 20th century, the City’s concern with exporting capital and generating shareholder value prevented industrial modernisation in Britain. Under Thatcher and Major, the promotion of capital freedom, the deregulation of the City and competition from Germany through the EU served only to worsen the situation. British companies became enslaved to a short termist corporate culture, needing to show shareholder value to investment banks who hold equities on average for less than a year. Those companies that survived became increasingly financialised, deriving an increasing share of their profits from the sale of insurance or banking services to their customers. Shamefully, New Labour continued to indulge the City and allowed the massacre in manufacturing to continue apace.
Since the 2008 financial crash it has become fashionable once again to talk about industrial strategy or ‘rebalancing the economy’. For the Coalition, this actually amounts to little more than cutting corporation tax and offering tax credits to companies too preoccupied with their bottom line to notice. Labour has made some progress, publicly airing the idea of a nationalised British Investment Bank. Yet too much attention is still focused on how to encourage over-leveraged banks to invest. Industrial strategy has to be about more than lending to Small and Medium Enterprises and hoping for a miraculous industrial renaissance. Instead, as we argued in Building an Economy for the People, Britain needs a radical state-led programme, with the strategic use of social ownership at its heart to tackle the structural weaknesses of our fragile manufacturing base and the financialisation of the economy. Only social ownership, we argued, can ensure long-term investment, governed by the strategic national interest.
However, with the manufacturing base so badly depleted, we need to have a clear idea of which industries to target for development through public ownership. That means identifying strategically important manufactures. One way of doing this would be to focus on those industries where there is existing capacity and potential, where there is the potential to win general export markets and/or where there is the prospect of creating large numbers of jobs in deindustrialised regions. Here are just three suggestions.
The first is green and clean technologies. Britain has established technological capacity in the development of clean coal technology, combined heat and power and offshore wind power, all areas with massive capacity to develop export markets to the BRICS economies in particular. As Mariana Mazzucato has argued, private capital will be unable to achieve this, viewing the long-term investment in breakthrough technologies in these areas as far too risky. Such advances in these technologies as there have been in Britain and worldwide have relied on large-scale public investment. Mazzucato has suggested that central to a future industrial strategy would be increasing public funding in the innovation structures necessary to develop such breakthrough technologies. But she has also suggested that this should be coupled with the use of public stakes and public ownership in the companies that develop and market these technologies, ensuring that the public that receives the benefits of its investment, rather than private shareholders.
The second example is the construction industry. More than 8% of all employment in Britain is in construction. Investment in construction has a huge knock-on effect on the economy more generally, which is one reason why a massive project of housebuilding and green ‘retrofitting’ is central to the left’s alternative economic strategies. Yet is the construction industry up to the job? British construction is dominated by a few very large companies like Balfour Beatty, AMEC and Taylor Woodrow, and a long tail of much smaller ones, many with just a handful of employees. These smaller firms have little incentive to invest in either the latest technologies or the skills of their employees, while the larger ones remain enslaved to the short-term interests of their shareholders. As a consequence construction has a low skills and technology base and unstable employment, problems exacerbated by its sensitivity to business cycles. In Beyond the Casino Economy, Seumas Milne, Jonathan Michie and Nicholas Costello argued that these problems could be addressed by taking into public ownership two or three of the biggest construction companies and merging them with companies specialising in construction design and technology.
 Given the strategic importance of construction, this is surely an idea that the left needs to revisit
The final example is food and drink processing, which is the single largest manufacturing employer, with around 400,000 employees. The industry is dominated by a handful of monopolistic supermarkets oriented overwhelmingly toward their shareholder value. As a recent report by researchers at the Centre for Research into Economic and Social Change (CRESC) revealed, most of the monopolistic supermarket chains have used aggressive supply chain management techniques to squeeze every bit of money out of farmers and processing companies and the horsemeat scandal is only one of the consequences. Yet as the CRESC researchers show, there is another way. Morrison’s has developed less adversarial relationships with suppliers and focused on integrating its retailing functions with a directly owned subsidiary in processing, achieving better employment relations, greater profitability and a more socially responsible business in the process. The implicit point is that social ownership of a major retailer and integration with processing companies could be used to restructure an entire industry, even promoting the greater use of larger cooperative farming enterprises.
So, the strategic use of public ownership can be used to radically restructure an industry, sheltering it from the damaging imperatives of shareholder value and enabling investment in its long-term development in the national and regional interests. But it’s also important that the publicly owned industries of the future leave behind many aspects of those in the past, which simply aped the worst features of monopoly capitalist firms.
Instead, public ownership can and must be used to increase social and democratic control of industry and work. This will include devolving decision-making internally by increasing trade union membership and collective bargaining, as well as promoting real involvement of workers in management and planning. It will also involve publicly-owned enterprises planning and negotiating with local, regional and national democratic bodies to ensure that the needs of all citizens and communities are addressed.
Using public ownership to democratise new industries can promote the wider interests of the working class. It increases the general level of social control over capital and reduces the influence of the speculating financial sector. It generates new, larger manufacturing concerns that can act as foundations for collective ideas and fulfil a wider societal function. Properly used, public or social ownership in industry can also devolve power internally to working people, giving them experience of controlling and administering their work and of planning and negotiating with wider social interests. In this way, an industrial strategy can help rebuild an active, self-conscious working class, experienced in running productive industries.
Jonathan White is the editor and co-author of Building an Economy for the People: an alternative economic and political strategy for 21st century Britain (Manifesto Press, 2012) and he tweets at @JonathanWhite73
 See for example, the recent historical analysis by Michael Kitson and Jonathan Michie in ‘The Deindustrial Revolution:The rise and fall of UK manufacturing, 1870-2010’,October 2012: http://michaelkitson.files.wordpress.com/2013/02/kitson-and-michie-the-deindustrial-revolution-oct-20121.pdfas well as chapter one of Jonathan White (ed.),Building an Economy for the People: an alternative economic and political strategy for 21st century Britain, Manifesto Press, 2012).
 White (ed.),Building an Economy for the People, esp. Chapter 2.
 Mariana Mazzucato, The Entrepreneurial State (Demos, 2011) and ‘Lighting the Innovation Spark’, in Andrew Harrop (ed.), The Great Rebalancing: the broken economy and how to fix it(Fabian Society Pamphlet, 2013)
 Nicholas Costello, Jonathan Michie and Seumas Milne, Beyond the Casino Economy(London, 1989)
 See Andrew Bowman, Julie Froud, Sukhdev Johal, John Law, Adam Leaver, Karel Williams, Bringing Home the Bacon: from trader mentalities to industrial policy, CRESC Public Interest Report, June 2012.
Picture: George Grosz Eclipse of the Sun 1926