The rebirth of Victorian values

`If you see Britain's economic boom through the eyes of a Victorian everything suddenly becomes recognisable'
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INFLATION IS at the lowest level for 36 years; unemployment at the lowest for 19 years. Is this some new golden age, or is it all too good to be true?

For, while most people in this country are benefiting from this long burst of rising prosperity, now into its eighth year, some are not. For the long-term unemployed, for people living in the "wrong" parts of the country, for those suffering from high levels of crime and other social ills, or for those without the skills that happen to be valued in the marketplace, these are not golden years at all.

So the evident economic success of this country raises two rather different questions. The first is, will it last? The second is, why is the success so uneven?

We have, I think, a further difficulty in trying to understand what is happening, for our perspective has been shaped by recent history - a history which is no longer relevant. We remember the late 1980s boom and the subsequent recession, and some of us remember the dreadful, high inflation and soaring unemployment of the 1970s and early 1980s. That gives us a perspective of sorts: we compare the present boom with the late 1980s and conclude that while there are some parallels, we are clearly not in the same potential hazard. We compare the low numbers with the double-digit inflation and double-digit unemployment and conclude that those two demons are firmly back in their cages.

That is all encouraging. But then we also find ourselves comparing the present with the last period of low inflation and low unemployment - the 1950s and early 1960s - and conclude that while we may be better off in economic terms, we don't seem to be in social terms. People then had great job security, with even the unskilled getting jobs straight away. The various social indicators told a quite different society: families were stable, only a tiny proportion of children were born out of wedlock, the crime rate was low.

For many people, the puzzle is that if we can get back to 1950s levels of inflation and almost of unemployment, why can't we get back to those levels of social stability? But that is only a puzzle because of the point of reference. The 1950s were really rather an odd decade, shaped by the catastrophe of the Second World War. The economy benefited from the surge of demand as the economy caught up with consumer demand, and society was still bound together by the experience of the war.

The more appropriate parallel - and I think the only way really to understand what is happening now - is the second half of the last century, a period also dominated by two gigantic forces: globalisation and technology.

Then, as now, the world was driven by a single global economic ideology, the market system. There was a global capital market, enabling companies all over the world to obtain capital at a market rate. Then, as now, there was an extraordinary burst of technical innovation, leading to new industries springing up and one formerly dominant one, agriculture, heading into long-term decline. Communications improved radically with the steamship and train, while one particular new technology, the telegraph, made possible the global capital market: prices on one point of the globe could be signalled to other market centres in a few seconds.

In fact Samuel Morse, the chief inventor of the telegraph, has been likened to Bill Gates, the most important developer of personal computer software, which in turn enabled the global growth of the Internet. One hundred years ago, for most people in this country the gradual increase in wealth meant that they lived better than ever before. But there was a downside. Not only were there obvious losers as well as gainers, but the sheer pace of economic change and the population movements associated with this meant that societies were disrupted. In the early and middle parts of the last century, there were enormous social costs to economic change and only gradually did Victorian society put in place the programmes needed to cope with these: parks in cities, public libraries, the Factory Acts, the police, and so on.

Now see our age through the eyes of a Victorian. He or she would not be surprised by low inflation: there had been no inflation since the Napoleonic Wars. Nor would there be much surprise about our unemployment levels, for towards the top of the various Victorian booms there would in effect be full employment in the strongly-growing industrialised parts of the country, but there were still enormous gaps between these and the rural areas.

Most important of all, the Victorian would not be surprised that some people found it hard to come to terms with these seismic changes: that some found they had the wrong skills, or maybe none at all that were suitable for the new economic needs. The Victorian would also applaud the efforts of government to help people who were falling behind but would also acknowledge that ultimately individuals had to take personal responsibility for their actions. The idea that a government should talk in moral tones - as our present government does - would again seem absolutely normal.

Now see Britain's economic boom through Victorian eyes and it all becomes quite familiar. Yes, the low inflation would certainly be sustainable. Indeed there would be no reason why prices should not go negative for a while. Victorians became accustomed to lower and lower prices for new technologies, just as we are used to cheaper and cheaper computers.

Unemployment? No reason why it should not come down a bit further this cycle - but note the word "cycle". For one of the seemingly inexorable features of the last century was the economic cycle, where a few fat years were followed by several lean ones. True, cycles now may be less marked, but I do not think we should forget that they still exist.

Britain's position relative to the rest of the industrialised world? Well, the fact that we have slipped in relative terms would be obvious, but I think a forward-looking Victorian would be most interested in whether the country was still innovating. One hundred years ago, the static picture of Britain was wonderful, but the dynamic picture would have revealed serious shortcomings. Now, I suggest, the pattern would be reversed. There are still a lot of economic weaknesses, a legacy of a century of relative decline; but there is also a lot of vigour, mixed with the humility brought on by that relative decline. At least we know we have to press on with reform.

If the economic picture would seem familiar enough, what about the social one? The fact that there should be rich and poor, lucky and unlucky, clever and not-so-clever would be wholly familiar. If there would be any surprise, it would perhaps be our lack of self-confidence that these problems can be tackled. A Victorian would be surprised that there should be such a large difference in the quality of public services from private ones: that, for example, a post office should be so much more scruffy than a bank. He or she might also be surprised that government help to the disadvantaged comes in the form of hand-outs of money rather than better public services. And, of course, the sheer size of the public sector would also be astounding: with all that money, surely it ought to be able to do better.

The big point, the one that matters above all else, would be that many aspects of Britain now would seem quite normal: more normal than the 1950s or 1960s - and certainly more normal than the 1970s and 1980s. Yes, give the odd bump in the cycle, the good times can last; but yes, too, the social and economic divisions that have opened up need to be tackled.