24 January 1986 - 26 January 1986

Restructuring Problems of the Western Industrialised Countries: Can They be Harmoniously Managed?

Chair: Sir Arthur Knight

The first conference after Christmas, on 24-26 January, was on an economic subject - "Restructuring problems of the western industrialised countries: can they be harmoniously managed?". The chairman was Sir Arthur Knight, former chairman of Courtaulds and of the National Enterprise Board. There was a good mix of both nationalities and professional interests. On the British side there was strong political, trades union, industrial, press and academic participation. The Americans were more weighted on the academic side. From the leading international bodies in the economic field we had a Vice-President of the Commission of the European Communities, a senior financial adviser from the World Bank and a Deputy Secretary-General of the OECD. There were the US, Canadian and Swiss Ambassadors to the OECD and the Canadian Ambassador for Multilateral Trade Negotiations (the US Ambassador to the OECD, the Hon Ed Streator, had been one of the prime movers of the conference). There were four participants from France, one from Germany and two from Japan.

The subject was a wide one and it appeared at first that the impressive expertise round the table was more used to being focussed on specialised aspects of the question than on the question as a whole. There was also an ideological divide, not dissimilar from the one which had appeared in the conference on energy. Some, taking their tone chiefly from Washington, wanted to talk only about market forces, allowing minimum intervention by governments: others started from the assumption that it was governments which had to act, making use of market forces only insofar as they served a general good. It took time to reach some sort of common ground.

The subject was broken down into three main topics - how to deal with decline in ’mature’, 'smokestack', 'traditional' industries, how to handle the transformation of production by advanced technology (especially information technology), and how to facilitate the growth of service industries as a new source of employment. The conference participants spent some time objecting to the imprecision of the terminology they were offered. Restructuring had always been taking place. Whether or not industries declined did not depend on their being mature. Services played some sort of a part in every industry and could not be treated separately. Deregulation was too sweeping a concept: would not regulatory reform be better? These contradictions were teased out after a time. It was agreed that there was an especial problem today because steady economic growth was no longer available to mop up unemployment. Governments had to intervene, if only to free market forces which might eventually get growth going again. In fact macro-economic measures in favour of growth and vigorous impulses in favour of education, training and re-training for a high-technology world were everyone's favourite recommendations. But the conference was not focussed on the problems of growth and education and had to spend most of its time dealing with a series of micro-economic issues of a fairly disparate nature. These issues will no doubt be brought out in the full report of the conference.

In the concluding plenary sessions one impression seemed to emerge inescapably. This was that European countries have much more difficulty than the US and Japan in coping with problems of restructuring. The fragmentation of the European market, the slow evolution of the European Communities, the immobility of labour, the high commitment to governmental intervention, the tendency of political institutions to exaggerate short-term considerations at the expense of long-term ones, the cultural legacy from past centuries ill-adapted to the new industrial revolution all these things combined to make Europe a low-performer in the restructuring stakes. Perhaps a conference ought to be held on the question "why is Europe falling behind?"

The adequacy or otherwise of the existing instruments of international cooperation in the trade field was not much discussed, except that everyone was against protectionism while entering caveats about its occasional utility in particular cases if it was transparent and degressive. There were allusions to the difficulty of having free trade if international money was left in chronic disorder by the leading governments, but this led back to the macro-economic problems which were not the conference's primary subject. There were calls for a fresh look at the adequacy of international institutions, and more particularly of existing European institutions, as they did not seem to be capable of fostering the harmonious world economic climate in which markets would be able to solve problems of restructuring in the unregulated ways in which they had been solved throughout history. The adequacy of existing international institutions is a subject on the Foundation's reserve list. Perhaps it ought to be brought forward.

This Note reflects the Director’s personal impressions of the conference.  No participant is in any way committed to its content or expression.

Conference Chairman: Sir Arthur Knight
Court of Governors, London School of Economics; Executive Committee, National Institute of Economic and Social Research


Mr David Baldwin

Managing Director, Hewlett Packard Ltd.
Mr William Callaghan
Head of Economic Department, Trades Union Congress
Mr Roy Grantham
General Secretary, Association of Professional, Executive and Clerical & Computer Staff (APEX); Member, General Council, TUC; Executive Member, European Movement, Labour Committee for Europe, Confederation of Shipbuilding and Engineering Unions; Governor, Henley Management College, the Ditchley Foundation
Professor Leslie Hannah
Director, Business History Unit, The London School of Economics and Political Science, University of London
Mr Gavin Laird
General Secretary and Member, Executive Council, Amalgamated Union of Engineering Workers (AUEW); Director, British National Oil Corporation; a Governor, the Ditchley Foundation
Mr Michael Marshall MP
(Conservative), Arundel; Member, House of Commons Select Committee on Defence; Parliamentary Adviser, British Aerospace and Cable and Wireless
Mr John Odling-Smee
Under Secretary, HM Treasury
Sir Austin Pearce CBE
Chairman, British Aerospace; Chairman, Industrial Policy Committee, Confederation of British Industry (CBI)
Mr Rupert Pennant-Rea
Editor, The Economist
Mr John Pinder OBE
Senior Fellow, Policy Studies Institute (PSI), London; Visiting Professor, College of Europe, Bruges
Mr John Prescott MP
(Labour), Hull East; Opposition Front Bench Spokesman on Employment
Professor Aubrey Silberston
Professor of Economics and Head of Department of Social and Economic Studies, Imperial College of Science and Technology, University of London; Secretary-General, Royal Economic Society
Professor Alasdair Smith
School of European Studies, University of Sussex; Co-director, International Trade Programme, Centre for Economic Policy Research, London
The Rt Hon John Smith QC MP
(Labour), Monklands East; Principal Opposition Spokesman on Trade and Industry; Advocate, Scottish Bar; Member, Programmes Committee, the Ditchley Foundation
Mr Sydney Treadgold FCA
Head of General Policy Division, Department of Trade and Industry (DTI)
Mr Christian Tyler
Trade Editor, Financial Times
Mr Gerald Wade
Government Programmes Manager, IBM United Kingdom Ltd
Mr Stephen Woolcock
Head of Industrial Policy Department, Confederation of British Industry

Mr Thomas d'Aquino

President and Chief Executive Officer, Business Council on National Issues, Ottawa; Chairman, Intercounsel (consultancy group); Attorney-at-Law; Member, Canadian Labour Market and Productivity Centre
HE Mr William Jenkins
Ambassador to the OECD, Paris
HE Mrs Sylvia Ostry
Ambassador, Multilateral Trade Negotiations, and Personal Representative of the Prime Minister, Economic Summit; Deputy Minister (International Trade) and Co-ordinator for International Economic Relations, Department of External Affairs

Herr Karl-Heinz Narjes

Vice-President, and Commissioner for Economic Affairs and Employment, European Commission

Monsieur Andr
é Bénard
Director and Member of Supervisory Board, Shell Petroleum Co Ltd, London
Monsieur Jean Cottet
Chargé de Mission, Service du Développment Technologique Industriel, Commissariat General du Plan, Paris.
Monsieur Michael Fouquin
Chef du Projet, Prospective Industrielle Mondiale, Centre d’Etudes Prospectives et d’lnformations Internationales, Paris
Monsieur François Lagrange
Le Directeur, Crédit National, Paris

Herr Josef Riederer Freiherr von Paar

Vorstandsmitglied, Thyssen Handelsunion AG, Dusseldorf

Professor Hideo Kanemitsu

Professor, Department of Economics, Sophia University, Tokyo
Mr Kazuo Nukazawa
Director, International Economic Affairs Department, Keidanren (Japan Federation of Economic Organisations), Tokyo

Mr Max Geldens

Partner, McKinsey & Co, Amsterdam

Mr Pierre Vinde

Deputy Secretary-General, OECD

HE Monsieur Jean Zwahlen

Swiss Ambassador to the OECD, Paris

Professor John H Barton

Professor of Law, Stanford University, presently on leave (1984-86) as Co-founder, International Technology Management (Consultants)
Dr Stuart M Butler
Director of Domestic Policy Studies, The Heritage Foundation, Washington, DC; Adjunct Fellow, The National Center for Neighbourhood Enterprise, Washington DC
Mr Geza Feketekuty
Counselor to the US Trade Representative
Mr Murray H Finley
President, Amalgamated Clothing and Textile Workers Union: Vice President and Member of Executive Council, AFL-CIO; Co-Chairperson, National Committee for Full Employment; Member, Board of Directors, Amalgamated Bank of New York, Advisory Committee on Trade Negotiations, Advisory Council, American Ditchley Foundation
Professor Gary C Hufbauer
Deputy Director, International Law Institute, Georgetown Law Center; Visiting Professor, Georgetown University; Member, Chapman, Duff & Paul (Attorneys), Washington DC
Dr Robert Z Lawrence Senior Fellow, International Economics, The Brookings Institution, Washington, DC
Professor Malcolm Lovell
Distinguished Visiting Professor of Government and Business, The George Washington University, Washington DC, and Senior Fellow, Hudson Institute
Professor Bruce R Scott
Paul Whiton Cherington Professor of Business Administration, Harvard Graduate School of Business Administration
Mr Henry Strage
Director, McKinsey & Co Inc, London
The Hon Edward J Streator
United States Ambassador to the OECD, Paris; a Governor, the Ditchley Foundation

Mr Percy S Mistry

Senior Financial Adviser in the Office of the Senior Vice President, Finance, IBRD (World Bank)