A nation of shopkeepers - and proud

The most famous of Napoleon’s insults for the British was that we were nothing more than “a nation of shopkeepers”. He didn’t come up with the phrase but did say the following towards the end of his life:

“Your (the British) meddling in continental affairs, and trying to make yourselves a great military power, instead of attending to the sea and commerce, will yet be your ruin as a nation. You were greatly offended with me for having called you a nation of shopkeepers… I meant that you were a nation of merchants, and that all your great riches, and your grand resources arose from commerce, which is true. What else constitutes the riches of England. It is not extent of territory, or a numerous population. It is not mines of gold, silver, or diamonds. Moreover, no man of sense ought to be ashamed of being called a shopkeeper.”

Napoleon goes on to state that this enterprising attitude was “l’esprit des Anglais”.  The key to British success was the people that power the economy; our great problem was the ruling elite didn’t recognise it. This understanding of “les Rosbifs” is even truer today than when Bonaparte uttered it some 200 years ago.

It was actually Adam Smith who first pointed out the British “shopkeeper” phenomenon in The Wealth of Nations.  He states that the government of Britain was exceptional because it was “influenced by shopkeepers”, by which he meant small and medium-sized traders and businesses.  In Europe it was the aristocracy, armed forces, Church and the very wealthy who held sway.

If we look at how the UK economy differs today from the rest of the developed world, this English spirit still runs strong.  Last year there were 5.7 million businesses in the UK, of which 95 per cent were small ones. In 2000 there were 3.4 million businesses, meaning that in under 20 years the UK has seen an extraordinary 67 per cent increase in business numbers – and it’s the small business sector which is nearly wholly responsible for this flowering.  UK growth over the last two decades is down to small business; no other western nation can get near this.

A huge amount of thought in government is given to how the UK should “be open for business” in the post-Brexit world.  This invariably comes down to how the UK can get large multinationals to invest in this country and not our nearest geographical competitors.  The conventional wisdom is to let international corporations pay as little tax as possible, while investing huge amounts of tax revenue (which isn’t there) to service the needs of these big businesses. You don’t have to be Adam Smith to work out that this is not a sustainable model.

The post-Brexit world shouldn’t go out of its way to be unattractive for large multinationals, but we should restructure the economy so that small businesses can flourish. In the short term, there should be a red-tape post-Brexit bonfire.  However, this should be specifically directed to take pressure off small businesses, not make life easier for large multinationals. There should also be an intelligent taxation system structured for ease of use for small and medium enterprises, not to enable large corporations to dodge taxes.

In the medium term, we should be investing in infrastructure projects which make it easier for domestic businesses to trade and export around regional areas of excellence.  The planned Oxford to Cambridge corridor and “Northern Powerhouse” are classic examples, but there should be so much more going on in every region and industry in the UK. By bringing the brainpower of small and medium sized enterprises together, you get far more innovation and excellence than any multinational could hope to offer.

Lastly, our education system is centred on churning out made-to-measure adults for the Victorian industrialised age.  We need the education system to create men and women who can run projects, solve problems and think holistically about challenges.  We need to start educating through project work and lifelong skills not subject specialism.

I was a Remainer. I thought the disruption of Brexit for British business would be too great.  I also thought we didn’t have the ability in government to take advantage of the opportunities coming out the EU would afford us.  

There’s no point having a row about the true extent of the disruption which coming out the EU is having, and will have, on the UK economy – it’s happening, so get over it.   

However, Brexit will give us the opportunity to take Napoleon’s advice and stop meddling in continental affairs and start “attending to the sea and commerce”.  We can only do this by rediscovering Smith’s “nation whose government is influenced by shopkeepers”. Do this, then we will develop the small business boom in the post-Brexit world.

What’s frustrating is that the government doesn’t seem to have noticed the boom, let alone realised it’s been going on for 20 years.  If we don’t take advantage of this, then all the pain of Brexit will be for nothing.