The Domestic Origins of Depoliticisation in the Area of British Economic Policy 1

Introduction: Depoliticisation in British Politics

In a recent article in this journal, Peter Burnham has argued that New Labour's actions in office since 1997 are best understood as a product of a new statecraft or governing strategy designed to depoliticise a number of key issues in British politics. Burnham (2001, 127) conceptualises depoliticisation as ‘… the process of placing at one remove the political character of decision-making’ (original emphasis). As such, this strategy is thought to confer two main benefits on those actors looking to deploy it. First, depoliticisation helps to alter market expectations regarding the credibility of policy-making. At a time when public trust in the capabilities of politicians is said to be declining, devolving responsibility for policy on to neutral, independent experts can be a way of enhancing the authority of political institutions. Second, depoliticisation can help to insulate politicians in office from the adverse consequences of policy failure. Some problems will be either controversial or intractable (or both), so much so that any decision runs the risk of making matters worse rather than better. In such situations, politicians (looking to protect their electoral position) may seek to shift the onus of action on to other groups or organisations (and with it, the potential for blame).

It should perhaps be noted that when Burnham defines depoliticisation as ‘the process of placing at one remove the political character of decision-making’, he appears to be making a distinction between the image and the reality of this act. After all, depoliticisation could have been defined simply as the process of placing at one remove the responsibility for decision-making from the hands of politicians. This distinction between image and reality is confirmed if we consider the sentence which directly follows the one just quoted above: ‘State managers retain arm's length control over crucial economic and social processes, whilst simultaneously benefiting from the distancing effects of depoliticisation’ (Burnham 2001, 127). Indeed, Burnham goes on to insist in other passages of the article that depoliticisation ‘does not represent the direct removal of politics from social and economic spheres’ (ibid., 136). Instead, it should be understood as a particularly effective form of ‘ideological mobilisation’ (ibid., 129). In other words, depoliticisation is not just about the formal (material) process of devolving decisions. It is also about charting how these discursive ploys are received and understood by those they are aimed at. To research depoliticisation then is to study a relationship between those who articulate and implement this governing method and those who are affected by it.

Having discussed Burnham's definition, it is important to recognise that it can be used to describe depoliticisation processes at two different levels. As we shall see, it can represent a technique (resembling different forms) employed in a particular policy area or sector. However, Burnham wants to go further and assert that the Blair government has developed a distinctive form of statecraft: ² a more general governing strategy which involves the employment of different depoliticisation techniques across multiple policy areas. What is particularly interesting about New Labour's statecraft is its blend of ‘youth’ and ‘experience’. Old methods of depoliticisation, such as the use of rule-based policies to take the politics out of decision-making (the Gold Standard) have been combined with new practices to provide a powerful mode of governance for managing (the issues and problems of) the British Polity in the 21^st century.

More specifically, three ‘aims’ distinguish depoliticisation strategies from other modes of state governance. The first is what Burnham terms the re-ordering or reassignment of tasks from the party in office on to non-political bodies. Burnham (2001, 137–141) highlights a number of examples where the Blair government has utilised this technique, including Gordon Brown's decision to grant operational independence to the Bank of England. A second aim that characterises the depoliticisation statecraft of New Labour is the attempt to increase the accountability, transparency and external validation of decision-making. Most notable in this context has been the Treasury's Code of Fiscal Stability, introduced to guard against the possibility of political interference in tax and spending matters (Burnham 2001, 141–142; for a more sceptical view, see Portillo, Financial Times, 11 December 2000; Howard, Financial Times, 31 October 2002). Finally, depoliticisation is marked out by an acceptance of credible, binding rules which limit the political discretion of decision-makers. Again, this technique can be detected in the area of fiscal policy with the creation of both the Golden and Sustainable Debt rules. However, an earlier example of Whitehall attempting to depoliticise policy decisions by imposing binding rules on its freedom of action can be seen in the acceptance of membership of the European Exchange Rate Mechanism (ERM). It was hoped that by ‘tying’ the operation of monetary policy to this semi-fixed exchange rate system, ministers could discipline public expectations and contain the (inflationary) demands of societal groups (see for example, Scott 1986; Balls 1992; Masson 1995; Bonefeld and Burnham 1996; Thompson 1996; Stephens 1996; Giavazzi and Pagano 1988; Woolley 1992; Walsh 1994). Indeed, it might be suggested that this third aim is the most significant for Burnham because the phrase ‘rule-based’ is included in the formal title of this depoliticisation typology (Burnham 2001, 131, 142–144).

If depoliticisation represents a process whereby the political character of decision-making is devolved on to non-governmental bodies, it can be distinguished from ‘politicised’ modes of governance. It should be noted that Burnham's (2001, 130–133) discussion of the aims underpinning politicised or discretionary policy instruments is not as explicit and detailed as his exposition of New Labour's depoliticisation statecraft. That said, politicised strategies would appear to be characterised by the principles of direct state intervention in the economy and society, as well as the co-option and incorporation of societal groups around these more ‘activist’ policies. Driven by these principles, Burnham argues that British political economy during the post-war period was distinguished by the following features: direct controls over production, consumption and exchange; incomes policies; the downgrading of exchange rate management; fiscal/monetary autonomy; the centralisation of policy-making; growth of the public sector and an increase in public ownership and control of industries; international co-operation (rather than integration). This typology does raise an issue: it is doubtful that, unlike depoliticisation strategies, British governments actually intended to politicise the conduct of economic affairs. In this case, we might want to ask whether the label ‘politicised’ is a useful one. Maybe the term ‘discretionary’ might be more helpful as an overall description of this governing strategy?

So, how can we explain the transition from politicised to depoliticised forms of governance? Burnham (2001, 134–136) does provide an account of statecraft change, although it should be stressed that this explanation is not the primary focus of the article. By the end of the 1970s, state managers in Britain began to seek out depoliticisation techniques because of changes that had been taking place in the international financial system. More specifically, Burnham stresses the decline of Bretton Woods as an institution for regulating the control of global credit and its gradual replacement by the euro-dollar market. Speculative capital assumed the function of national institutions in the sense that this international market for debt began to finance the budget and balance of payments deficits of governments. Because the euro-dollar market gradually became a transnational institution operating continuously across time and space out of the control of any one individual country, the limits of domestic credit expansion began to impose themselves through speculative pressure. When we also remember that foreign exchange dealers prefer to hold currencies that are backed by anti-inflation policies, the search for counter-inflation credibility becomes a top priority for domestic policy-makers. It was eventually decided that depoliticisation, particularly in the area of interest rate policy, was the most desirable response in this context (see also, Clarke 1987; Bonefeld, Brown and Burnham 1995; Burnham 2000; Bonefeld 2001).

Burnham's has yielded provides a novel and interesting interpretation of New Labour and how it should be situated within the context of British politics more generally. In this endeavour, he provides a useful corrective to existing literature which seeks to discover whether ‘new’ Labour: (a) remains a social democratic party in the mould of ‘old’ Labour; (b) has moved so far right-wards ideologically that it is nothing more than ‘Thatcherism with a human face’; or (c) has successfully pursued a ‘third way’ between these two ‘extremes’ (see for example, Driver and Martell 1998; Heffernan 2000). From a statecraft perspective, parties in government are not concerned with ideological dominance, but more with designing programmes and institutions to help build an electoral bloc big enough to keep them in power. This is not to argue that ideas and ideologies are of no importance when it comes to understanding policy outputs, but to state that they are rarely important in their own right. Instead, all ideas have governing dimensions and if they achieve influence in Whitehall, it will usually be because they fit in with the existing politico-administrative culture or ethos of the policy-making community under investigation. In short then, what is new and interesting about New Labour is not its ideological trajectory (often a cover for cruder governance objectives), but the establishment of a novel code of polity management since 1997 (Burnham 2001, 129; see also Bulpitt 1995 and 1996).

The rest of the article attempts to build on Burnham's work by addressing more explicitly the question of statecraft change over the last 30 years or so. Burnham's emphasis on developments in the international financial system is undoubtedly important when it comes to accounting for the emergence of depoliticisation techniques. Indeed, depoliticisation is now increasingly a worldwide phenomenon, a tendency that at least suggests the importance of global causes (see for example, OECD 2001). However, the impact of external developments will often be mediated by domestic political factors, despite the recent popularity of academic claims that the nation state is ‘… being weakened, hollowed-out, carved up, toppled or buried’ (Weiss 1998, 2). National politics can often influence the timing and precise content of externally driven changes to domestic policy. At the same time, responses to international trends are also likely to be conditioned by past experience of governing in the particular area under study. In short then, while an appreciation of international factors is crucial to our understanding of the emergence of depoliticisation strategies in Britain (or indeed any other country), it is important not to neglect the domestic conditions that may facilitate the adoption of these methods of governance.

The next section of the article reviews some of the main issues relating to our understanding of social and political change. It then goes on to assert that, despite the prevalence of politicised strategies in post-war British political economy, decision-makers operated within a ‘strategically selective context’ that penalised the deployment of discretionary or interventionist policy instruments (Jessop 1990; Hay 1996a). It should be stressed that the failure of politicised modes of governance was not inevitable as a result of this unfavourable institutional context. Part of the responsibility lay with policy-makers, who hoped these discretionary policies could be grafted on to existing structures, despite the incongruence between the two. When contradictions emerged between this politicised statecraft and the structural terrain on which it was practised, this situation created domestic space for the introduction of depoliticisation techniques, which were in many ways more suited to this context.

Understanding Change in Statecraft Regimes: Some Theoretical Issues

It is beyond the scope of this article to provide an exhaustive review of the burgeoning literature on social and political change (see, for example, Sztompka 1993; Marsh et al. 1999, chs. 1 and 4; Legro 2000; Hay 2002, ch. 4; Thelen 2003). However, this work throws up a number of questions which are relevant to the discussion and four will be outlined briefly below.

One obvious place to start is the size or the scope of the change which is being observed. According to Marsh et al. (1999, 25–26) change implies ‘contrast between states or moments of a common system …’. Ironically then, change involves some element of continuity. To identify change in a particular unit of analysis, that unit of analysis must maintain a minimum of identity, otherwise the analyst is studying discontinuity not change. That said, when change happens, it can come in different shapes and sizes. It can be partial, having little or no repercussions for, say, the particular statecraft under study. Or, it can be substantial, affecting a number of core elements or functions of this governing strategy. It should be noted that the difference between small change and major transformations may be more difficult to ascertain in practice (Sztompka 1993, 6). Indeed, it will be argued below that the shift from politicised to depoliticised methods of governance is less significant than Burnham's typology implies because the former remained relatively underdeveloped.

A second issue that needs to be considered is the direction of change. When we observe the replacement of one statecraft with another, are we studying linear or non-linear processes? Does change follow a single path, passing through a number of necessary stages which can almost be predicted in advance? Or, to put this point less strongly, is it possible to identify certain regularities that often occur when one governing regime makes way for another? We might even go further and ask whether the shift from politicised to depoliticisation strategies represents one point in an inexorable process towards some teleological end state or conclusion? If so, does depoliticisation equate to progress or improvement in the governing stakes? Does this trend of taking the politics out of decision-making represent a better or more desirable style of governance than the more interventionist strategies of the 1960s and 1970s? (Buller and Flinders, 2006)

The tempo of change is a third question which preoccupies much of the literature on this subject. Some writers highlight the possibilities of a revolutionary process: a tendency whereby the system under study is ‘punctuated’ abruptly, leading to a ‘critical juncture’ and sudden moment where rapid transformation takes place. On the other hand, evolutionary accounts delineate change as a gradual, slow-moving process which unfolds incrementally over time. Indeed, on closer inspection, it would appear that Burnham subscribes to an evolutionary explanation of the emergence of New Labour's depoliticisation statecraft. As already implied, politicised or discretionary modes of governance were judged to have failed by the mid-1970s (1976 is the designated cut-off point). Yet, Burnham also states that rule-based strategies did not come into being until the early 1990s, implying that depoliticisation took a decade or so to develop. This interpretation is strengthened by the absence of any discussion of ‘critical junctures’ or exogenous shocks although, as noted, Burnham assigns a significant role to external developments more generally.

Finally, this discussion would not be complete without an examination of the causes of change. Again, the literature makes a twofold distinction. On the one hand, there are explanations that stress the importance of endogenous or internal factors. Here, we might speculate that the transition from politicised to depoliticised modes of governance was largely the result of developments within the statecraft itself. Conversely, exogenous change refers to a situation whereby the impact of external factors is responsible for reform of the object under study (a theme we have already noted several times in Burnham's work). It should be noted that the occurrence of exogenous shocks does not automatically lead to change. Actors confronted by a crisis brought on by external forces may actually retreat into a greater reliance on pre-existing patterns and behaviour (Legro 2000, 423). The important point here is that it may not be the ‘objective’ impact of exogenous factors that is important, but how such factors are mediated by actors that is crucial to the question of explaining change (Hay 1996b; Marsh et al. 1999, ch. 4).

These comments lead on to the question of structure and agency and their relationship to social and political change. Is change largely a product of agential factors, where understanding shifts in statecraft regimes may be an exercise in charting the interests, beliefs and relative power position of competing groups as they alter over time? Alternatively, are structural factors more important to understanding change? Structures may contain ‘emergent properties’, even their own logics of transformation (Sayer 1992). Contact with other structures may set off a causal chain of developments in ways unanticipated by those agents responsible for their original construction. Such a scenario is more likely to take place if structures are ‘layered’; that is to say, they are grafted on to each other in a way that does not reflect conscious design and, as a result, may contain inherent contradictions.

More recently, the literature on change has displayed a tendency to abandon many of the distinctions noted above. Instead, academic work now increasingly stresses how change (evolutionary or revolutionary) is the result of multiple processes and factors which may converge or diverge. At the same time, notions of teleology and progress have gradually been abandoned. Change can be both contingent and path dependent as present and future courses of action will be significantly delimited, but not determined by past institutional trajectories. One consequence of this revised position is an increasing concern with not reifying processes of change. All reform is the product of constrained human agency and, ontologically, agents and structures will be mutually implicated in a relationship that unfolds dialectically across time and space. Elements of structure (or more accurately, perceptions of that structural environment) will become embedded in the beliefs and interests of actors. At the same time, those self-same structures will at any moment reflect the outcomes of past strategic battles and political choices of individuals and groups seeking to reform this environment in a way that strengthens their own position. In short, then, agents and structures are only abstract conceptual categories. In reality, neither has an existence in isolation from the other and their interaction cannot be reduced to the individual properties of either (Hay 2002, ch. 3). When we discuss them separately (as will be the case below) this ploy is for analytical purposes only, to help clarify the precise nature of the argument for readers.

When it comes to understanding the transition from politicised to depoliticisation strategies, it will be argued below that this process can be explained not just by the external developments outlined by Burnham, but as a result of related factors at the domestic level. In clarifying the importance of the latter, the rest of the article follows a twofold structure. It begins by delineating this ‘strategically selective context’ in the area of economic policy, showing how key features of this terrain made the operation of discretionary policy instruments difficult. In particular, the discussion highlights a ‘duality’ or reciprocal autonomy which has existed historically between the ‘industrial’ and ‘political’ spheres, as a key attribute of this domestic institutional context. The article then goes on to suggest that part of the reason for the failure of politicised governing strategies comes down to an issue of agency. Having introduced these new modes of governance into the area of economic policy, state managers in Whitehall shied away from the structural changes needed to allow for these reforms to work. When contradictions between this specific politicised statecraft and broader economic institutions emerged, they created a space for the introduction of the depoliticisation techniques that became so popular in the 1980s and the 1990s.

What then are the main features of this strategically selective context allegedly predisposed to depoliticisation techniques? The discussion below stresses five characteristics.

The ‘Dual Polity’ ³ between the ‘Industrial’ and the ‘Political’

(1) The defining feature of this structural context was a ‘duality’ which existed between the ‘industrial’ and ‘political’ spheres in many area of British economic policy. Throughout the second half of the 19^th and the first half of the 20^th century there existed a governing code whereby politicians agreed not to interfere in the affairs of British industry in return for a reciprocal freedom of manoeuvre in matters of party policy. However, during this period, this understanding crystallised into a more general structural property which persisted well into the post-war period. The autonomy of business to manage its own affairs had become a deeply engrained hallmark of liberal free market ideas, which dominated the discourse surrounding economic policy formation at this time (Middleton 1985, 83–91; Holland 1991, 104). However, trade unions' right to free collective bargaining had similarly become an entrenched feature of British industrial relations by the start of the 20^th century. The result was a fragmented system of wage determination whereby each industry gradually evolved its own methods and institutions for negotiating pay levels and settling disputes (Crouch 1979; Minkin 1991, ch. 1; Maguire 1996, 45–46). When one also remembers the relative absence of labour law governing relations in British industry before the 1970s (Marsh 1992, 1–4; R. Taylor 1993, ch. 1), the lack of a structural foundation for more interventionist state strategies in the supply-side of the economy becomes more keenly appreciated.

(2) This structural duality between the industrial and the political was compounded by a further decentralisation of power in industrial relations, which began in the 1940s and continued into the 1980s. Whereas before the Second World War, the existence of industry-wide wage agreements was enough to regulate the majority of activity on the shop floor, this situation had changed by the 1960s. Now, national deals only provided general guidance for wage rates and were often supplemented by a myriad of more specific settlements covering different categories of workers within individual factories. It should be noted that the leadership of peak groups in industry at this time were willing to acquiesce in this decentralisation of control, if for no other reason than it absolved them from the responsibility of having to discipline their own membership. However, this fragmentation of relations provided a further obstacle to any idea of national planning, particularly in the area of prices and incomes (Cmnd. 3623 1968; Blank 1978; Denton, Forsyth and Maclennan 1968, 265; Minkin 1991, 112–113; Wrigley 1996).

(3) The comparatively ‘open’ nature of the British economy also helped to reinforce this duality between the industrial and the political. From the mid-19^th century onwards, British governments became increasingly reliant on income from ‘invisible’ exports (particularly financial services provided by the City of London) to meet the cost of imports. ⁴ This pattern of trade necessitated a policy stance which protected and promoted the position of finance capital, most notably the attempt to resurrect sterling's reserve currency status by returning to the Gold Standard in 1925. However, this institutional bias in favour of finance also had the effect of distracting policy-makers from domestic reforms thought necessary by some commentators to ease the balance of payments constraint by boosting the position of manufacturers. It is true that state managers did preside over various initiatives to restructure and modernise British industry in the inter-war period. But, these efforts could only really be described as piecemeal and ad hoc in nature (Winch 1969, 118–122, 220–222; Weir 1989, 61; Middlemas 1994, 465). Instead, the overwhelming consensus concerning the best way to revive the fortunes of British manufacturing was to ensure that exports were able to compete freely again in international markets, as had been the case before 1914 (Skidelsky 1967, 38, 142, 150, 241). It should be noted that this advocacy of external market solutions to domestic supply-side problems continued well after Britain left the Gold Standard in 1931.

(4) It could be added that the openness of the British economy was underpinned by the divided nature of British capital as it developed historically. As already noted above, as well as managing sterling as the internationally accepted means of payment and exchange for the international economic system, the City of London's gradual specialisation in insurance for commodities, foreign exchange dealing and the financing of trade, saw it develop a commercial character which diverged from the needs of industry (Ingham 1984). At the same time, these developments saw a number of regional joint stock banks, which had provided funds for British manufacturers, redirect their activities to the City's short-term markets in money and securities. Increasingly, Britain, unlike other countries, lacked a system of industrial banks that could take the place of the state, exploit their close financial connections with firms and impose rationalisation and restructuring wherever necessary (Hall 1986, 35–45; Cain and Hopkins 1993, 17–19; Denton, Forsyth and Maclennan 1968, ch. 2; Kreile 1978).

(5) Finally, this duality was supported by the ideology of parliamentary sovereignty; perhaps the most persistent feature of the British institutional tradition (Judge 1993). Most important in this context was the normative view that Westminster should provide the sole arena for the expression of interests within British society. As already suggested above, the desire for executive leadership often conflicted with the practice of parliamentary sovereignty. But, the idea remained important, not least to the trade unions who had been at the forefront of the campaign to extend the franchise during the 19^th and 20^th centuries (Minkin 1991, 32). The dominance of this view also meant that other forms of interest representation, such as the corporatist modes of governance which became prominent in many other countries, always faced legitimacy problems in Britain. As we shall see, some of the interventionist policy instruments that were initially adopted as part of the politicised statecraft which existed after 1945 were dropped because they were thought to be at variance with this doctrine of parliamentarianism.

In short, when politicised governing strategies were first introduced after 1945, they faced a domestic institutional context unfavourable to these methods of economic management. The existence of a duality between the ‘industrial’ and ‘political’ spheres meant that Whitehall traditionally lacked much in the way of capabilities for intervening in the supply-side of the economy. Moreover, to have attempted such action in a sustained fashion ran the risk of provoking hostility and opposition from industry, which jealously guarded its freedom to govern its own affairs. This is not to say that structural factors provide the sole explanation for the problems facing the implementation of politicised modes of governance after 1945. In many cases decision-makers (agents) were aware of these constraints, yet attempted to adapt policies to fit in with this strategically selective terrain, rather than undertake institutional reform. This unwillingness to face up to the structural obstacles constraining discretionary modes of governance is also an importance source of their failure. This article concludes by considering this argument in more detail below.

Conclusions

In conclusion, this article has sought to contribute to the academic work on depoliticisation by addressing the question of how the change from politicised to depoliticised governing strategies in British politics can be explained. The article began by detailing theoretical developments in this area which increasingly came to accept that social and political change was a multi-faceted and contingent process. It then went on to argue that, when it came to understanding the origins of depoliticisation, Burnham's discussion of exogenous developments needed to be supplemented with an account of various endogenous or domestic factors. In particular, the article highlighted the importance of a strategic selective context (dual polity) which was unfavourably disposed to discretionary and interventionist strategies. It also asserted that policy-makers in the post-war period attempted to introduce politicised modes of governance without acknowledging and addressing the structural penalties that faced the implementation of such policy instruments. As a result, the contradictions between the governing strategy and institutional context created a space for the emergence of a depoliticisation statecraft in the 1980s and 1990s.

What more general conclusions can be drawn about the process of change in this particular case? This discussion above has suggested a picture of evolutionary change. Rather than tracing the origins of depoliticisation back to one particular moment or critical juncture, this article has pointed to a gradual playing out of internal contradictions between discretionary policy instruments and the institutional context surrounding their operation. Again, it should be emphasised that these contradictions were not a necessary or inevitable feature of the statecraft as it existed at this time. They were, in part, a product of human agency, as policy-makers failed to appreciate the structural prerequisites for the successful implementation of this politicised governing strategy. Moreover, for these contradictions to ‘set-off’ the conditions leading to the shift from politicised to depoliticised modes of governance, they needed to be understood and acted upon by these ‘agents’ or policy-makers.

At the same time, while there was nothing inevitable about the emergence of depoliticisation as a governing strategy, this article has uncovered evidence of path dependency. Although discretionary policy instruments were introduced in the post-war period, in many cases they remained underdeveloped and failed to transform the structure of the British economy in a way which embedded their operation. Since the 1980s however, the gradual implementation of depoliticised methods has entrenched the institutional duality between the industrial and the political in ways that will make it more difficult to reverse this strategy in the short term. Indeed, we might speculate that the continued experience of governing within such structural conditions may, in itself, have encouraged a proclivity for a rule-based statecraft on the part of policy-makers. In other words, depoliticisation has become an end in itself, as opposed to a means to the broader objective of winning elections and achieving an image of governing competence. At the end of the day, to state this conclusion may be to go too far. That said, it would appear that depoliticisation as a mode of governance will be favoured by British political elites for some time to come.