Over the course of the seventeenth and eighteenth centuries, the desire of poorer people in cities across Europe to consume what were once luxuries enjoyed only by the very rich was just as influential in shaping the history of work as the invention of technologies to exploit the energy in fossil fuels. Without it, there would have been no markets for mass-produced items, and without markets the factories would never have been built. It also rewrote the rules by which much of the economy operated. The growth of Britain’s economy increasingly came to depend on people employed in manufacturing and other industries reinvesting their wages in the very same products they and their factory workers manufactured.

Where history is a better guide to the future is on the nature of change. It reminds us that we are a stubborn species: one that is deeply resistant to making profound changes in our behavior and habits, even when it is clear that we need to do so. But it also reveals that when change is forced upon us we are astonishingly versatile. We are able to quickly adapt to new, often very different ways of doing and thinking about things and in a short time become as habituated to them as we were to those that preceded them. This being so, while automation and AI have made it possible for us to embrace a profoundly different future, it is unlikely that it will be the catalyst that causes the dramatic changes in “social customs and economic practices” that Keynes envisaged. Far more likely catalysts take the form of a rapidly changing climate, like that which spurred the invention of agriculture; anger ignited by systematic inequalities like those that stirred the Russian revolution; or perhaps even a viral pandemic that exposes the obsolescence of our economic institutions and working culture, causing us to ask what jobs are truly valuable and question why we are content to let our markets reward those in often pointless or parasitic roles so much more than those we recognize as essential.

Leslie Hannah, an eminent business historian, has shown how the ‘rationalisation’ of industry, which was favoured by the British Government (represented by the Bank of England), set the stage for the new ‘corporate economy’ which would characterise Britain for decades. The 1920s saw the creation by merger of ICI (chemicals), the Distillers Company (Scotch whisky) and Unilever (soap and margarine). A similar wave of mergers in Germany established IG Farben and Vereinigte Stahlwerke as the dominant chemical and steel producers respectively. (Both these companies were dissolved by the victorious Allies in 1945.)

8: The Decline of Manufacturing

“As Smith noted, the division of labour was limited by the extent of the market, and the growth in the geographical scope of markets has steadily increased the geographical division of labour. Switzerland and Denmark are among the richest countries in the world, but neither produces automobiles.

Contrary to many people’s images of a society focused on tourism and banking secrecy, Switzerland is an outlier in the Global North, with 20 per cent of the working population engaged in manufacturing, particularly speciality chemicals and precision engineering. But little of this manufacturing is of the kind that requires its exhausted workers to wash off the dust and sweat of the day as they return home.

I wanted to write a sort of cybernetic political thriller, but it didn’t quite work out that way. It seems that in order to get to the point where the story begins, you need to write eight chapters explaining the construction of the murder weapon. But here we are. To recapitulate, the basic problem is that systems in general need to have mechanisms to recognise themselves when the complexity of their environment gets too much to bear. But the high-level governing systems of the industrial world — economic policy and business management — had some defects and blind spots which prevented this from happening. How did that turn into an economic crisis, and how did it mature into an ongoing political polycrisis? How did we get from the Friedman doctrine and leveraged buyouts to Trump, Brexit and populism?

The first part of the story involves expanding on the conclusion of the last chapter. A key part of recent history has been a story of class struggle, but not the usual kind. There’s been a class war between the capital-owning class and the managerial class.