In the Footsteps of Isambard Kingdom Brunel

Speech given to a Professional Development Conference of DFIDDepartment for International Development Advisers (social development, infrastructure, livelihoods and climate change), Bristol, 13 November 2017.

Note: this is a lightly edited version of the transcript of an after dinner speech, so not a carefully worded paper. Readers, I hope, will forgive the informality and occasional digressions.

Introduction

I've come to Bristol, to this Conference of DFIDDepartment for International Development livelihoods, climate, infrastructure and social development advisers, seeking the answer to two questions that I hear discussed everywhere in development. On the high plains of Mongolia, in the yurt at night, they discuss these questions. In the steaming jungles of the Amazon, they discuss these questions. And on the plains of Africa.

The two questions are these. The first is: livelihoods, climate, infrastructure and social development. What's that about? Where are the governance advisers? Where are the economists? It’s kind of like when your four best friends go off to school and form a secret society without you. Why this group of advisers and where is everybody else? We might come back to that a little bit later on. What is the unique comparative advantage, the unique selling point of this particular group of advisers? I think the answer is that you hold the key

The other question in development that is discussed everywhere is: Why Bristol? You could have been in Brighton, which would have saved me the journey. Even better, you could have been in Portsmouth North (the constituency of your new Secretary of State).

Lessons from the history of Bristol: infrastructure, institutions, social development . . .

It turns out, though, that Bristol is an interesting place. My guess was that you didn't come here to study slavery, or its impact on economic development in Africa and Europe. But Bristol played a big part in the movement of 500,000 slaves from Africa to the West Indies and America.

I suppose you didn't come to Bristol either to study the history of the tobacco industry, but Wills, the big tobacco people, were extremely important in Bristol. That's another story about development.

There are, however, other stories which are highly relevant to this group of advisers, because Bristol was right at the heart of change at the time of the Industrial Revolution. Between about seventeen hundred and 1850, partly because of canals but also because of the Great Western Railway, built by Isambard Kingdom Brunel, transport costs from this part of the country to London fell by 95 percent. That was completely transformative for Bristol. Infrastructure creates development, apparently, and the Great Western Railway which I expect most of you travelled on, is an illustration of how you can create a growing economy.

Of course, the Great Western Railway is not just about steel rails going across the countryside. One of the great features of the early 19th century was what were called the gauge wars.  Isambard Kingdom Brunel had a walking stick which folded in two. When it was opened up, it was seven feet long. He wanted that to be the gauge of the railway because he'd worked out that that was more efficient for going round corners and up and down hills and what have you. But in other parts of the country, they were building railways with a narrower gauge, the one we know today. There was a huge row in parliament and elsewhere, but Isambard Kingdom Brunel lost and we are left with the narrower gauge.  Institutions matter. Change happens when you have technology and institutions put together. There are many examples of that in history.

To move on, Bristol grows, it becomes important commercially, the sixth biggest city in the UK. Bristol today has a GDPGross Domestic Product of something approaching £15 billion, which makes it equivalent to Mali or Mozambique. What it is famous for today is not railways particularly, certainly not slavery, nor even tobacco. The most interesting industry today in Bristol is British Aerospace. A really modern highly technological industry, designing the wings for Airbus, and of course lots of defence contracts. Where did that come from? How do you get a cluster in a place like Bristol which brings together all those high technological skills.

Well, the answer, in part, is Sir George White.  His mother was a domestic servant, so an example of social mobility, he ended up controlling the horse drawn tram industry in Bristol in the late 19th century, providing transport around Bristol. There were more than 800 horses living in the centre of Bristol to pull all these trams. Then they produced electric trams, the business grew, it put off offshoots in places like London and other parts of the UK, and all those engineering skills developed until of course electric trams were also superceded. But Sir George’s interest shifted from trams to aeroplanes, of which he was an early pioneer. Now this absolutely illustrates one of the core tenets of economic geography, which is that you acquire transferable skills or ‘capabilities’. Maybe one industry declines, but you have those skills and you can transfer them to something else.

So, for development people in all your different sectors, Bristol actually provides you with the answer to all your questions! You want to eliminate extreme poverty, then think about the infrastructure, think about the institutions which surround infrastructure, and work to develop new industries on the back of existing skills.

Of course, development is not all about economics. I had a couple of hours on the train today so I read Hillbilly Elegy, a completely riveting account of the intersection between economics and culture driving poverty and marginalization in the Appalachians in the US. The loss of a steel works costs jobs, but in addition, there are enormous amounts of cultural baggage, like family violence, young marriages, children abandoned, which militate against people finding new ways out of poverty. And we know that if you want to turn a city into something like Bristol today, it doesn't just happen by accident, and you don't just solve it by putting in infrastructure and institutions.

Read a book written 50 years ago by E.P. Thompson, The Making of the English Working Class. It is especially interesting for livelihoods advisers, on the prevalence of diversified, risk prone livelihoods in the late eighteenth century. But what happens of course, through the 19th century, is a combination of technical change, new industries, social organization, education for workers, trade unions, and political mobilization, and out of that comes a gentle progression towards the welfare state that began to emerge at the beginning of the 20th century.

So - you can put in the railway, you can deal with the gauge wars, but if you don't deal with all the other elements, then that is where development can go badly wrong.

One of the key factors in all these changes is that there are enormous numbers of winners and losers.  The Luddites, after all, did not destroy the looms and burn the mills out of some wilful view of the world, but because they were losing their jobs, in fact their diversified livelihoods, with a loom at home, and a vegetable garden, where the wife usually did the spinning and the man usually did the weaving and the children were busying around helping as well. That way of life disappeared, not just with an economic cost, but also a social one.

Three big challenges in international development

Now, a key point is that the changes we are seeing today are on a scale which may be even greater than the scale of change we saw at the beginning of the 19th century, and will create even more winners and losers. And the question I think you face as DFIDDepartment for International Development advisors is whether we wait 100 years to resolve that or whether we can cut the process of managing change and do it more quickly and more efficiently.

I've been thinking about three facets of change, which come together, and are all in the end the same problem. It's that classic development studies question: Who gains? Who loses? And we could add a third question: And what are we going to do about it on Monday morning?

What are those changes, briefly?

Automation

The first, obviously, is automation. You can't open the papers without reading about the losses of jobs caused by robots. Even in China, Foxconn has just fired 60,000 workers to be replaced by robots.  Who gains? Who loses? And what do we do about it? There's a new report from the World Bank called ‘Trouble in the Making’. The route to poverty reduction through manufacturing may be closing, because of the impact of automation on where production is located, the labour intensity of production, and the organization of global value chain. The Report is pessimistic about the  difficulty countries are going to have replicating the manufacturing success particularly of China, and that remains true even if jobs shift to the flying geese and then eventually to Africa.

This applies also in agriculture. A field in the UK grew a crop this year with no human setting foot on the ground, thanks to the use of automated machinery and drones. There are machines now which can not only harvest grapes but can also prune vines, often in the dark because there is less distraction. And of course it's not just robots, but the use of very sophisticated computer systems, for example in food distribution. A question for DFIDDepartment for International Development advisers:  what is agriculture going to look like in the highlands of Ethiopia, if the world market is driven by that kind of technological change.

Climate change

A second example is climate change.  We talk all the time about mitigation: wind turbines and solar panels. We talk about adaptation: dykes and mangrove swamps. However, the key thing to know about climate change is that action on climate change, if we take it seriously, is going to drive an industrial revolution, with differential impacts as between countries, classes, genders, and geographies.  

The key number to know in climate change is 42, which as everybody here will know is the answer to Life, the Universe and Everything, in the Hitchhiker's Guide To The Galaxy. This is the target level of emissions in Gigatonnes in 2030, coincidentally the year the SDGs come to pass.  On the current trajectory, emissions in 2030 will be about 55 Gt, and the rise in temperature will be over 3 degrees. Without Paris, we would have been at 59Gt, So, Paris delivered 30 percent of what needs to happen by 2030.

But, let's say we get there, with electric cars, with much cheaper renewable energy, and so on and so forth. Well, prices will change, the size of markets will change, the quantities will change, countries which have a comparative advantage today will not have a comparative advantage tomorrow and vice versa. Countries will find new markets to exploit and push out competitors. An example. China developed a 30 billion dollar a year export industry of solar panels to Europe, without at the time having solar panels in operation in China at all. It was an opportunity for China to export and to create manufacturing jobs, and with German subsidies they seized it and developed an industry which is now of course going back to China.

So, think about the countries where you work and ask yourselves which businesses are at risk. If your neighbour is investing in energy efficiency to reduce costs and you are not, perhaps because they have regulations about climate emissions and you haven't, what does that do to the competitiveness of your industry? These are going to be huge drivers.

Globalisation

The third in my trio of big global changes is the winners and losers from globalization, which is kind of linked to the others. I really worry that in development we're going to be caught in a narrative in which the good jobs have gone to China and other places, and development people are somewhow responsible. If it hadn't been for our work, maybe the jobs would still be in Kidderminster and Portsmouth and all the forgotten towns which voted for Brexit last year. And when you look at the de-industrialisation that's happened, and you look at the loss of self-respect that goes along with all those job losses, then I think you have to say we have a case to answer, because we haven't been successful in finding solutions for the forgotten towns and for the losers in this big debate about who are the winners and losers.

When you put these things together, it’s not all about economics, but there are hugely important economic drivers which underpin a lot of what we all do. And when we talk about leave no one behind, and extreme poverty, those at the bottom of the heap are not just sitting there while all this churns along above them. They're absolutely intimately part of those big social changes. The loss of industrial jobs destroys communities. Those are the people who are left behind in many countries, not those living in some sort of Arcadian primitive peasant society which never existed.

Between neo-liberalism and populism

What kind of responses do we get to this from policymakers? There are two obvious ones that we have to deal with. The first is populism. How horrid. Make it go away. We'll close the borders. We’ll become self-sufficient.

The other response is neo liberal. Free trade will do it. We needn’t worry about the winners and losers, because everything will come out in the wash. And if we wait 150 years, the welfare states will reinvent themselves.

This is about politics, but with a small p and not a big P. However, I can see no future in a populist ideology, and no future in a neo liberal ideology. Why do I think that? Because actually, this is a development story. Some of you will be old enough to remember structural adjustment in the 1980s which was the neoliberal version, if you like, which disregarded any possibility of social intervention. Some of you will be even remember import substitution programmes in Latin America in the 1950s, which were kind of at the other end, and that didn't work either.

I call the middle way social democracy, but you can call it anything you like, really. Our job as development professionals is to find that path. A progressive path between neo liberalism and populism. We need to make this part of our global narrative and make it relevant to the UK as well as to the developing world. Read Re-thinking Capitalism by Jacobs and Mazzucato.

A new narrative is going to focus on competitiveness and having viable businesses. It has to do that. That means having strong state-led support for innovation, for infrastructure development, for the underpinnings of successful business. It is fascinating to look at the UK industrial strategy, for example, and to think about a progressive industrial strategy which focuses on the transition to a green economy.  Mariana Mazzucato’s book, The Entrepreneurial State, is a touchstone on this topic.

A progressive industrial policy also has to have to have a social dimension. Remember, the reaction to structural adjustment was adjustment with a human face, and the social dimensions of adjustment, helping people to transition, away from jobs which are not going to have a future into new and better jobs.

Conclusions

This brings me to a couple of conclusions. We started with the question of why this group of advisers.  We have seen in the case of Bristol that development requires the combination of the economic, the institutional, the infrastructural and the social. Similar challenges arise in considering automation, climate change and globalisation.  A pathway needs to be found between neoliberalism and populism. You have the opportunity to tell a story about what the future looks like and how to get there. This will take you beyond the SDGs, which provide a great description of the destination, but, frankly, not a roadmap of how to get there.

The challenge then for you, as DFIDDepartment for International Development advisers, will be how to take your findings into the political space. The bigger narrative is not always visible in speeches that ministers have made, for example with respect to the structural changes associated with climate change.

In the end, the world in 2030 will look different to the world we know today. If the development narrative does not recognise change, then we will have lost the plot.  And if we lose the plot, the people who suffer are not us but all the people out there who will end up more poor, more marginalized, more excluded. You have the key. It's up to you to fix it.

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