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The real big idea in Gordon's speech

• Paul Mason
• 22 Jun 06, 11:46 AM

Pity the spinner and the spun to. For 24 of the 36 hours before Gordon Brown made his latest Mansion House speech ( or watch it here) I was supposed to be covering it: I had even dug my black tie out of the back of the wardrobe. Then the editors of Newsnight decided Thames Water was a less boring story than Gordon on Globalisation. But in the middle of a reed clump in the , Brent, I got a call from Gordon鈥檚 people alerting me that 鈥� like a well aimed outswinger on a humid day at Trent Bridge 鈥� the message of the great man鈥檚 speech had curved, late in its trajectory, away from globalisation and towards nuclear annihilation.

Was I aware, the 鈥渟ources close鈥�, asked me, that the nuclear issue was the 鈥渓ast of the big issues to be sorted out in the next six to eighteen months鈥�? And that this was Gordon speaking 鈥渁s himself鈥� and 鈥渙utside his remit as Chancellor鈥�?

Actually yes I was 鈥� and having heard the full speech I wish that Gordon Brown鈥檚 spinmeisters had actually stuck to the original top line, namely Britain鈥檚 role in a globalised economy, because it is on getting that right 鈥� rather than maintaining the theoretical ability to outnuke Vladimir Putin 鈥� that the UK鈥檚 future probably depends...

Gordon Brown鈥檚 ideas on globalisation (unlike the nuclear stuff) do not need decoding. Here鈥檚 what he said:

鈥溾�ust as the pace of globalisation has quickened since we met a year ago, just as the rise of Asia and globalisation鈥檚 overall scale and scope has intensified, so too has the backlash. People talk today less of globalisation and its benefits, more of globalisation and its discontents.

And it is not just nations who lose, it is global businesses, who stand to lose most - the very size of our global market diminished by restrictions on cross border flows of investment, and on takeovers and mergers and by barriers to competition and commerce generally.鈥�

From the mouth of the man in charge of the world鈥檚 fourth biggest economy, and possibly the last of the pro-globalising polticians of mid-1990s still in office (discounting Tony Blair), those are words to take time over.

What he is describing is the convergence of two sources of opposition to economic globalisation: popular opposition to its impact on first-world living standards; and the growing realisation among power-politicians that there may sometimes be a choice between national security and economic internationalism.

The Chancellor did not tell the whole story on the latter. Let鈥檚 start with America. In addition to blocking the Dubai Ports acquisition it also blocked China鈥檚 acquisition of Unocal. Plus Congress is discussing a bill to limit foreign ownership of infrastructure in general. Much of the economic nationalism on display in Europe has been about infrastructure assets in the modern sense: refusal to allow Russian acquisition in the energy markets; attempts to protect national champions or create European ones 鈥� as in the government interference to protect Arcelor against the Mittal Steel takeover. In Asia, South Korea is reportedly experiencing a shiver of anti-globalisation at the corporate level, with the chaebol (conglomerate bosses) appealing to national sentiment as a protection from global competition.

In summary 鈥� one source of economic nationalism is states protecting their infrastructure assets and manufacturing base. Why now? Because the sheer volume of cash washing around the financial system (as a result of high oil prices) is making takeovers easy to finance and thus 鈥済lobalisation鈥� is reaching into parts of the economy that were not once touched by it; in addition infrastructure assets are attractive because they provide steady profits (hence Thames Water, paradoxically, is part of the same story: owned by German RWE and about to be sold as a piece of prime corporate real estate because the regulator has more or less guaranteed its profits for the next five years).

But there is another source of economic nationalism: energy security. The Chancellor touched on this in his speech. In the upcoming G8 conference the UK government is, behind the scenes, trying to broker the basics of a new system of global energy security. Word has it they are failing: any deal announced at St Petersburg will be cosmetic. So you have Russia using energy to bash the near-abroad countries (Ukraine, Georgia); turning off Ukraine鈥檚 gas was a signal that reverberated through the governments of Europe, and now they are all scrambling to make sure they have long term contracts and a security of supply strategy. I am sorry, but that, to me makes sense 鈥� especially in a situation where the EU institutions are so undeveloped as to make a Europe-wide energy security strategy unreliable. Viewed objectively, Britain鈥檚 decision to build new nuclear power stations 鈥� already taken in private but not yet shared with the rest of us 鈥� is also 鈥渆conomic nationalism鈥� 鈥� because it involves a state-directed signal to the market in the form of future carbon prices that removes the need to 鈥渟ubsidise鈥� nuclear by making carbon-based energy dearer.

The third source of economic nationalism is trade. The Doha trade round is faltering. The negotiations have become an arena for an economically nationalistic (or regionalistic) clog fight between the US, EU and the BRICs countries. If Doha fails, then the trend to bilateral trade deals between the US and its client states, and the EU and its client states, will continue. Answer me this: where does a bilateral trade deal stand on the axis between globalisation and economic nationalism? I think it stands nearer to the latter, and contributes to the rising atmosphere of 鈥渆very man for himself鈥� in global economic strategy.

Finally there is global geo-politics. As states begin to use economic tools as weapons in diplomacy more overtly 鈥� China鈥檚 premier to pick up raw material alliances, Russia鈥檚 Gazprom scouring Europe for 鈥渄ownstream鈥� investment opportunities 鈥� smaller states are being forced to react.

Where does all this leave Britain? Well, as Gordon Brown spelled out last night, we are the last of the true believers. Others will bar politically-managed Russian companies from acquiring stakes in our energy infrastructure; we will welcome it. Others will protect ports and airports from foreign ownership; not us. Others will 鈥渇ight for the last job鈥�; we will train people for the next one, hoping the creation of a high-skill workforce will attract it. Others will worry about migration of low-skilled workers creating a permanent underclass of Brits with no escape from poverty; not the Labour government. It will be the last man standing in the Doha trade round, slugging Euro-protectionism from within, using the genteel fists of Commissioner Peter Mandelson, while slugging the Americans and slugging the Brazilians in the hope that it will all fall into place as a free-trade nirvana.

That was the real vision contained in Gordon Brown鈥檚 speech last night and I am sorry that the combined efforts of his special advisers and the Westminster political correspondents managed to bury it beneath a non-headline about Trident. Because the most pressing question is: is he right? Should Britain, in the face of all this, not consider becoming more 鈥渆conomic nationalist鈥�? There is hardly any serious politician in the British mainstream who would ask the question, let alone answer it differently to Gordon Brown 鈥� so in a way you have to admire his vision for being prepared to pose it.

If all that chest beating, eyes-to-the-flag stuff at the World Cup national anthem ceremonies is not just ironic, we are seeing a rise in popular nationalism as a response to globalisation. Like local identity, people are starting to cling on to it because in economics there is little permanent or certain 鈥� like your job, your community, your social status. Brown is right to observe all this is happening very fast 鈥� year on year changes are noticeable, not incremental.

The first serious politician willing to synthesise the 鈥渄iscontents鈥� about globalisation among the electorate with the growing unease about it among western elites could invent a new political ideology. At least we know now, if we did not know already, it will not be Gordon Brown.