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BUILDING A SUSTAINABLE POLITICAL ECONOMY:
SPERI RESEARCH & POLICY
Diverging
Capitalisms
Britain, the City of
London and Europe
Edited by
Colin Hay
Daniel Bailey
Building a Sustainable Political Economy: SPERI
Research & Policy
Series Editors
Colin Hay
SPERI
University of Sheffield
Sheffield, UK
Anthony Payne
SPERI
University of Sheffield
Sheffield, UK
The Sheffield Political Economy Research Institute (SPERI) is an inno-
vation in higher education research and outreach. It brings together
leading international researchers in the social sciences, policy makers,
journalists and opinion formers to reassess and develop proposals in
response to the political and economic issues posed by the current com-
bination of financial crisis, shifting economic power and environmental
threat. Building a Sustainable Political Economy: SPERI Research &
Policy will serve as a key outlet for SPERI’s published work. Each title
will summarise and disseminate to an academic and postgraduate stu-
dent audience, as well as directly to policy-makers and journalists, key
policy-oriented research findings designed to further the development
of a more sustainable future for the national, regional and world econ-
omy following the global financial crisis. It takes a holistic and interdis-
ciplinary view of political economy in which the local, national, regional
and global interact at all times and in complex ways. The SPERI research
agenda, and hence the focus of the series, seeks to explore the core eco-
nomic and political questions that require us to develop a new sustaina-
ble model of political economy at all times and in complex ways.
More information about this series at

http://www.palgrave.com/gp/series/14879
Colin Hay · Daniel Bailey
Editors
Diverging Capitalisms
Britain, the City of London and Europe
Editors
Colin Hay Daniel Bailey
Centre Etudes Europeennes Political Economy Centre
Universites Science Politique University of Manchester
Paris, France Manchester, UK
Building a Sustainable Political Economy: SPERI Research & Policy

ISBN 978-3-030-03414-6 ISBN 978-3-030-03415-3 (eBook)
https://doi.org/10.1007/978-3-030-03415-3
Library of Congress Control Number: 2018959878
© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer
Nature Switzerland AG, part of Springer Nature 2019
This work is subject to copyright. All rights are solely and exclusively licensed by the
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of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction
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The use of general descriptive names, registered names, trademarks, service marks, etc. in this
publication does not imply, even in the absence of a specific statement, that such names are
exempt from the relevant protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and
information in this book are believed to be true and accurate at the date of publication.
Neither the publisher nor the authors or the editors give a warranty, express or implied,
with respect to the material contained herein or for any errors or omissions that may have
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This Palgrave Macmillan imprint is published by the registered company Springer Nature
Switzerland AG
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
Foreword
With rising inequalities in the context of the great financial crisis, the
structural power of finance and the Brexit vote, parties of the left and
centre-left have an important role to play. Jeremy Corbyn’s Labour Party
must be congratulated for its powerful campaign in the run-up to the
2017 UK General Election, in which it was clearly able to get its message
across to millions of people and many more than was expected by oppo-
sition parties and those within the progressive community itself. The
message of being “for the many, not the few” resonated with close to 13
million voters and it has a truly progressive basis. But progressives must
not become complacent and think that the job has been done. Now is
the time to build on that success.
In fact, if we can be confident of anything, it is that the relationship
between the UK and the EU will be something completely different to
what was promised by the Leave campaign during the referendum. The
EU must remain firm and even more importantly, must remain united.
There must be no option for the UK to look for potential trade alliances
in countries such as Hungary, Poland and other new member states. Not
because the UK must be made to suffer. Quite the opposite. The pro-
gressive community in the UK and Europe must stick together, must use
each other, to ensure the best possible deal for everyone.
Given this political challenge, FEPS (Foundation for European
Progressive Studies, Brussels), Policy Network and SPERI (Sheffield
Political Economy Research Institute, University of Sheffield) joined
forces in 2016 to convene a series of workshops in the framework of
v
vi Foreword
their joint project ‘Diverging Capitalisms? Britain, the City of London

and Europe’. The project also benefited from the financial support of the
European Parliament. The aim of the joint venture was to consider the
changing nature of the British economy, its place within the European
economic space and the consequences of ‘Brexit’. The work undertaken
fed into a number of policy briefs, and, finally, in the publication of this
edited book.
The research project was designed to allow for open discussion about,
the socio-economic ramifications of Brexit, the changing nature of the
city of London, the global financial crisis and social and economic ine-
qualities across Europe. One objective of this research project was also
to bring together a group of scholars to reflect about these issues of pro-
found importance to the future of Europe and the role of Britain within
the European economic space—even before Brexit became a reality. The
roundtable debates that took place in London and Brussels allowed the
authors featured in this book to pit their ideas and hypotheses against
those of other academics, policymakers and think tankers in London and
Brussels. Through this publication, FEPS, Policy Network and SPERI
hope to spur innovative thinking to enrich the debate about the future of
progressive politics and economic restructuring in Europe.
Brussels, Belgium Dr. Ernst Stetter

June 2018 Foundation of European
Progressive Studies
Acknowledgements
We owe a debt of gratitude to many people who were instrumental in

organising the project from which this book has emerged. Tony Payne,
Ernst Stetter and Roger Liddle were vital in bringing the project to
fruition and it subsequently benefited from the leadership of Renault
Thillaye, Lisa Kastner and Charlie Cadywould.
The research would also not have been possible without colleagues
past and present at the Sheffield Political Economy Research Institute
(SPERI), most notably Arianna Giovannini, Tom Hunt and Laure Astill
to whom we are extremely grateful.
vii
Contents
1 Introduction: Brexit and European Capitalism—A

Parting of the Waves? 1
Colin Hay and Daniel Bailey
2 After Brexit: The Past and Future of the Anglo-Liberal

Model 17
Andrew Gamble
3 “Pragmatic Adaptation” and the Future of the City

of London: Between Globalisation and Brexit 43
Leila Simona Talani
4 The Limits of the City’s Structural Power: The City’s

Offshore Interests and the Brexit Referendum 73
Helen Thompson
5 European Union Financial Regulation, Banking Union,

Capital Markets Union and the UK 99
Lucia Quaglia
6 Integration and Disintegration: Two-Level Games

in the EU 125
Waltraud Schelkle
ix
x Contents
7 The UK’s Growth Model, Business Strategy and Brexit 149

Scott Lavery
8 The Bed You Made: Social Democracy and Industrial

Policy in the EU 171
Angela Wigger and Laura Horn
9 Unusual Bedfellows? The IMF, Tackling Inequality

and Social Democratic Policy Renewal 195
Ben Clift
Index 221
Contributors
Daniel Bailey Political Economy Centre, University of Manchester,

Manchester, UK
Ben Clift Department of Politics and International Studies, University
of Warwick, Coventry, UK
Andrew Gamble Sheffield Political Economy Research Institute,
University of Sheffield, Sheffield, UK
Colin Hay Centre d’études européennes, Sciences Po, Paris, France
Laura Horn Roskilde University, Roskilde, Denmark
Scott Lavery Sheffield Political Economy Research Institute, University
of Sheffield, Sheffield, UK
Lucia Quaglia University of Bologna, Bologna, Italy
Waltraud Schelkle European Institute, London School of Economics,
London, UK
Leila Simona Talani Kennedy School of Governance, Harvard University,
Cambridge, MA, USA; King’s College London, London, UK
Helen Thompson University of Cambridge, Cambridge, UK
Angela Wigger Radboud University, Nijmegen, The Netherlands
xi
List of Tables
Table 3.1 Frieden’s model 56

Table 3.2 Predicted effects of expanding exposure to trade 57
Table 5.1 Overview of the UK’s roles in selected financial policies
in the EU 104
Table 6.1 Stylised two-level game representations of German
and UK positions 131
xiii
CHAPTER 1
Introduction: Brexit and European

Capitalism—A Parting of the Waves?
Colin Hay and Daniel Bailey
In the early 1990s it was de rigueur to argue that the challenge of

competitiveness in an age of ever greater economic interdependence
was likely to put pay to the institutional diversity of capitalism itself,
certainly in the western world. Globalisation, in other words, was
an agent of convergence like no other—driving down taxation, reg-
ulation and welfare spending. Lumped together, as it so often was,
with the end of the Cold War’s ideological battle, this prompted the
liberal Right to herald proudly the ‘end of history’ with the global
triumph of both Anglo-liberal capitalism and Anglo-liberal democ-
racy (Fukuyama 1989). It political-economic terms, it was argued
that the (largely) exogenous and (seemingly) agentless forces of glo-
balisation compelled states to engage—and, ultimately, to succeed
C. Hay (*)
Centre d’études européennes, Sciences Po, Paris, France
e-mail: colin.hay@sciencespo.fr
D. Bailey
Political Economy Centre, University of Manchester, Manchester, UK
e-mail: daniel.bailey@manchester.ac.uk
© The Author(s) 2019 1

C. Hay and D. Bailey (eds.), Diverging Capitalisms,
Building a Sustainable Political Economy: SPERI Research & Policy,
https://doi.org/10.1007/978-3-030-03415-3_1
2 C. HAY AND D. BAILEY
in—the interstate competition for internationally-mobile capital if

they were not to endure a profound loss in economic performance.
In short, they had no alternative other than to adapt their political
economies to the (perceived) needs of global finance. This, it was
posited, would necessitate a form of state transformation character-
ised by fiscal restraint, supply-side rather than demand-side forms
of intervention, the prioritisation of low inflation over full employ-
ment, and the re-moulding and re-purposing of existing welfare state
institutions to suit the goals of national strategies for attaining and
sustaining competitiveness. The ‘competition state’, as it was termed
(by critics as well as admirers), was thus identified as the successor to
the Keynesian welfare state of les trente glorieuses, the model around
which the contemporary nation-states would henceforth crystallise
(Cerny 1997).
Yet despite this claim, hypothesis, hunch or conjecture—and per-
haps unremarkably to students of the longue durée—capitalist diver-
sity persisted. In 2001, Peter Hall and David Soskice published their
now seminal text, Varieties of Capitalism. Based, as it was, on a fusion
of rational choice and historical variants of the new institutionalism, it
sought to demonstrate that the political economies of the advanced cap-
italism worlds were in fact clustering around not one but two models.
These twin Pareto optima were, in effect predicated on, and sustained
by, different institutional foundations of national competitiveness. The
first of these model capitalisms they termed the Liberal Market Economy
(LME). It was characterised by flexible labour markets, stratified wages,
and mobile capital with a typically short-term focus. LMEs, thus under-
stood, were seen as innovative, flexible, adaptive and responsive to
changing competitive circumstances, a process lubricated by a liberal-
ised financial sector allocating resources between opportunities as they
presented themselves. Hall and Soskice’s exemplary LME cases were the
Anglophone economies—the USA, the UK, Ireland and Australia. The
liberal character of their market governance was seen to be mirrored in
the more individualistic character of their cultural tendencies. The sec-
ond model capitalism identified and described by Hall and Soskice was
the Coordinated Market Economy (CME) model. Here we find a more
densely institutionalist configuration—a corporatist model in which
non-market relations take on a far more important role. This model
involves by a less arms-length role for the state—a coordinator and not
1 INTRODUCTION: BREXIT AND EUROPEAN CAPITALISM … 3
just a regulator. CMEs are characterised by more tightly and actively reg-
ulated labour markets, a greater degree of social protection, and a virtu-
ous self-reinforcing cycle of patient capital, long-term investment in skills
and training, and collaborative rather than conflictual industrial relations
in which employer organisations and trade unions play a central role
alongside the state. The CME model is most commonly used to denote
the economies of Germany, Sweden, Finland, Switzerland, Norway and
the Netherlands.
Hall and Soskice’s approach has proved phenomenally influential. Its
central premise is that the variety of capitalism to which an economy
belongs shapes profoundly the types of corporate strategy to be found
within it, influencing in turn levels of productivity, domestic disposable
income and so forth. The theoretical and conceptual tools proffered by
Hall and Soskice are a touchstone for comparative political economists
seeking to understand the role of national institutional configurations in
shaping economic practices and strategies of competitiveness—with their
broader implications for the distributional patterns, systemic risks and
political contestation pertaining to national capitalist systems (Schmidt
2002; Hay 2004, 2005; Rhodes 2005; Hall and Gingerich 2009; Hall
2014; Soskice et al. 2016).
Yet it is important to note that the analytic distinction between LMEs
and CMEs is an ideal-typical one. As many scholars have argued, the theo-
retical categories and empirical claims posited by the framework are highly
contestable (Pontusson 2005; Bruff and Horn 2012; Bruff and Ebenau
2014; Bailey and Shibata 2014; Coates 2015). As such, and as Hall and
Soskice themselves made clear, no country can be expected to conform to
either model in its entirety. The specificities of institutional change inter-
act with relatively distinctive national growth models which incentivise the
privileging of particular sectors in economic governance (such as the City
of London or the Bavarian manufacturing industry) resulting in idiosyn-
cratic paths of economic development (Hall and Thelen 2009; Hay and
Wincott 2012). However, the categorisation did succeed in emphasising
the different strategies capable of achieving competitiveness. In so doing,
it came to serve as an important corrective to the expectation, typical of
the literature of the time, of a globalisation-engendered process of conver-
gence. In place of this simple convergence thesis Hall and Soskice substi-
tuted a more complex and institutionally-differentiated dual convergence
thesis.
That was then. Since the 2008 financial crash the world has changed
significantly—and so has how we think about it. With the benefit of the
hindsight the crisis affords, some of the limits of convergence theses
(whether simple or dual) are more starkly exposed. Put bluntly, to under-
stand the developmental trajectories of contemporary capitalism it now
seems rather more important to focus on sources of disequilibrium and cri-
sis, rather than to work with equilibrium models. In a world in which it is
acknowledged that crises are possible, there are limits to the value of ide-
al-typical reflections on stylised models of capitalism. For such approaches,
however well they might describe a current situation, fail to anticipate, and
lack the conceptual resources to make even retrospective sense of, crises.
Arguably, then, one of the casualties of the crisis is our current under-
standing of the dynamic variability of capitalism institutionally. This vol-
ume is a contribution to the debate such a reflection presages.
An initial point of departure is the acknowledgment that the political
attempts to navigate low levels of economic growth since the crisis do
not lend themselves readily to a story of convergence (whether simple or
more variegated). The 2008 crash was followed by the European sover-
eign debt crisis, increasingly fractious relations between the Eurozone’s
creditor and debtor countries, prompting attempts at capitalist restruc-
turing intended to instigate national economic recoveries. The 2010s
have thus seen European economies implement differing levels and types
of fiscal austerity, monetary activism (within and beyond the Eurozone),
welfare retrenchment and labour market reform. Simultaneously, the dis-
content fostered by low growth and the political attempts to navigate it
have contributed to the rise in popularity of right-wing and Eurosceptic
populist figures and parties particularly amongst unskilled or semi-
skilled workers in deindustrialised regions (the so-called ‘left behind’).
Although it is an identifiable trend across Europe, the most conspicuous
manifestation of the populist ascendancy so far is ‘Brexit’ itself; the with-
drawal of the UK from the European Union and (it now seems clear)
the Single European Market. The exact terms of the UK’s withdrawal
are subject to intense on-going negotiations. It is on the outcome of
these negotiations that arguably the very feasibility of the UK’s existing
growth model will rest.
But the uncertainty that Brexit has prompted is not contained domes-
tically; it has certainly heightened the sense of political indeterminacy
(albeit to differing degrees) within European economies. The strategic
disorientation within the UK created by Brexit itself suggests further
bouts of fragmentation and capitalist re-structuring in the near future,
matched in all likelihood by political-economic change within the EU

now that its erstwhile ‘awkward partner’ is set on a different course
(whatever that turns out to be).
For some, particularly the Conservative Party’s ‘Brexiteers’, Brexit
represents an opportunity for a further radical liberalisation of the UK
economy. No longer bound by supra-national ‘red tape’ and the EU’s
regulatory disposition, the UK in such a conception might re-fashion
itself as a European Singapore, paring back still further the vestiges of
its labour market regulation whilst cutting taxation and reducing further
welfare eligibility and generosity. Competitiveness would be achieved in
this model through the offer of a ‘good business environment’ to inter-
nationally mobile capital, at the expense of hard-won workers’ rights,
environmental protections and the scope of the state’s existing welfare
policies. Central to this strategy would be the swift negotiation of trade
deals with the emerging economies of Asia and South America, in par-
ticular, a precondition of which is that the UK cannot remain a mem-
ber of the Customs Union. In the short term, the UK would fall back
to the trade terms of the WTO, or would take the advice of the group
formerly known as ‘Economists for Brexit’ (now rebranded ‘Economists
for Free Trade’) to declare a unilateral strategy of trade liberalisation by
eliminating any and all tariff and non-tariff barriers. This would represent
a drastic deepening of the Thatcherite project (or at least its neoliberal
elements) in the UK. It is at present by no means widely supported. But
if no trade agreement has been reached between the EU and the UK at
the point of withdrawal (on March 29, 2019, two years after the trig-
gering of Article 50) then its proponents could feasibly swell in num-
ber. This is a proposal that many card-carrying Brexiteers within the
ruling Conservative Party incline towards—including, of course, both
Boris Johnson and Jacob Rees-Mogg. But the opposition to it, including
within the current Conservative Cabinet, should not be underestimated.
At times, during what has to date been a fraught negotiation process,
its value to the government has seemed to be the tacit (if perhaps rather
hollow sounding) threat that it might be seen to pose. It need hardly
be pointed out that this is a potentially dangerous game to play—not
least as it has given a platform that it might not otherwise have had to a
hyper-liberalising idea of Britain after Brexit.
A very different conception of the post-Brexit scenario is reached in the
UK were it to remain a member of the Customs Union and retain access to
the European Single Market (and its attendant regulatory structure). Here
the potential divergence between Britain and the EU would be far less
drastic. This is the so-called ‘Soft Brexit’ option—the scarcely veiled prefer-
ence of the UK Treasury in opposition to the Department for Exiting the
European Union. Philip Hammond, the Chancellor of the Exchequer and
chief proponent within the Cabinet of a ‘Soft Brexit’, believes that such a
deal is likely and that any capitalist divergence resulting from Brexit will be
modest. To the dismay of the many Brexiteers in his Party, he argued at the
World Economic Forum in Davos that:
Instead of doing what we’re normally doing in the trade negotiations –

taking two divergent economies with low levels of trade and trying to
bring them closer together to enhance that trade, we are taking two com-
pletely interconnected and aligned economies with high levels of trade
between them, and selectively moving them, hopefully very modestly,
apart. (Hammond 2018)
The battle lines are drawn. As this suggests, the internal politics of the
Conservative Party make it extremely unclear to what degree we will wit-
ness a significant change in UK macroeconomic strategy and an associ-
ated potential bifurcation of British and EU capitalisms in the decades to
come. Even the short-term trajectory is unclear. It may well be that by
the end of the current Parliament, Britain will actually conform less well
than it does today to the LME template. Theresa May has already pro-
fessed a certain critique of financialised Anglo-liberal capitalism. In her
first Conservative Party speech as Leader, in the midst of the tense politi-
cal climate after the EU referendum, she chose to denounce the stateless
‘international elite’ and vowed to re-unite the country by making ‘cap-
italism’ operate ‘more fairly for workers’ (Financial Times 2016). In a
later speech in January 2017, she refuted the principles of Thatcherism by
stating that ‘people who are just managing, just getting by, don’t need a
government that will get out of the way, they need a government that will
make the system work for them’ (Financial Times 2017). She has since
proposed worker representation on corporate boards and re-introduced
the language of industrial strategy (if, as yet, not with a great deal of sub-
stance) back into British politics. These are sentiments which have divided
the Conservative Party and have not at the time of writing been translated
into major policy changes. The difficulties of overcoming the ‘lock in
effects’ of existing competitive advantages and vested economic interests
in order to change macroeconomic course appear to have been too great.
Yet Theresa May appears cognisant that the strategic considerations

of economic re-orientation must be attuned to the broader context of
the social crises precipitated by recent waves of capitalist restructuring.
This is a febrile context in which to engage in macroeconomic strat-
egising. The particular types of austerity measures and labour market
reforms (chosen by ruling parties or demanded by the Troika) since the
2008 financial crash—and their impacts on the wage share, precarious
work and inequality especially—have had profound political and social
impacts. They have compounded deeper structural issues of socially
and geographically unequal growth, the increasing importance of asset
ownership in determining distributional outcomes (Piketty 2014),
and the incremental dismantling of the welfare state and the concom-
itant rise of private debt (Soederberg 2014). These capitalist structures
have contributed heavily to the spectrum of discontentment evident
in Europe today. As already alluded to, one manifestation of this has
been political polarisation. The precariousness in deindustrialised low-
growth areas outside the major cosmopolitan cities amongst unskilled
or semi-skilled workers has seemingly contributed to anti-establishment
sentiment and rise of right-wing populism, as discontent has bred dis-
tributional conflicts on racialised lines and anti-immigration feeling.
Meanwhile, the younger generations and the poorest (particularly but
not exclusively in the UK) are looking further to the left as a result of
being so deeply affected by policy decisions and being almost entirely
excluded from the asset appreciation which is so central to the UK’s
current growth model. The decade of sluggish economic performance
since 2008 has also had ramifications for geo-political fragmentation,
with many in Scotland and Northern Ireland uncomfortable with their
place in a ‘Brexiting Britain’; reflected by separatist movements in main-
land Europe under similar economic conditions. These developments
seem to be, and indeed should be, of serious concern for Theresa May’s
government as it wrestles with strategies to improve the UK’s eco-
nomic performance. May has already gained the reputation of being
a cautious politician, and the performance of the Labour Party in the
2016 UK General Election will only have intensified her caution fur-
ther. Alternative economic thinking is not imprudent in such a context,
but there is a danger that certain strategies could exacerbate rather than
alleviate social instability.
This is to say nothing of the environmental threats to European pros-

perity, which threaten to very foundations of wealth creation. The conse-
quences of ecological degradation to economic performance were most
famously assessed by Nicholas Stern, whose findings have been seen as
conservative in order to garner political support by some (Stern 2006;
Anderson and Bows-Larkin 2012). Environmental degradation represents
not only the threats to capitalist production still to come, but trends which
are already feeding into economic performance. Pessimism about the future
of economic growth itself, the levels of which have been in steady decline
since the mid-1970s, suggests that the current malaise is not necessarily a
punctuation of the equilibrium (Streeck 2014). This is a politically and eco-
nomically tumultuous period which threatens to get even worse.
So what are the foundations of competitiveness upon which European
political economies can achieve greater prosperity in the twenty-first cen-
tury? What are the sectors of growth in the coming decade and what are
the political strategies capable of nurturing them? And, perhaps just as
significantly, what are the potential institutional means of sharing the
proceeds of economic success equitably?
These are questions of profound importance for the parties of the left
and centre-left, whose vote share has declined in recent years, at least in
part because of their inability when in office to halt the trend towards
rising inequality (Crouch 2012). As Patrick Diamond (2016) has noted,
in its electoral appeal the left has tended to depoliticise economic choice
since the 1980s, opting to deploy a more technocratic language vis-à-
vis economic policy options. This has undermined its ability to respond
to the subsequent economic crisis and created an ideational vacuum in
political-economic thinking in sites of power. As a result, many progres-
sive parties were seen as complicit in the choice for and implementation
of austerity in the period since the 2008 financial crash. And they have
suffered electorally as a consequence. The offerings of many traditional
parties of the left are greeted with more muted enthusiasm today, with
core sections of their traditional support base having become less and less
enamoured by the cause and in some cases even defecting to right-wing
populist parties (Mair 2011). In this context, it is crucial that the debates
on developmental capitalist models return to prominence. How do social
democratic parties adapt to the economic realities facing their elector-
ates? How can progressive political-economic strategies address the
economic, social and environmental issues raised by, and ultimately trans-
form the dysfunctional capitalisms of Europe? Can socially just economic
models be based on sustainable foundations of competitiveness? Is redis-

tribution alone enough to mitigate the rise of inequality in the context of
Piketty’s analytical insights about the distributional patterns of capitalist
societies? In short, where does progressive politics go from here (see also
Coates 2018; Hay and Payne 2015)?
To respond to the failure of Europe’s social democratic parties in
the last decade, we must begin with a sober analysis of the character
of European capitalisms, the inequalities they generate, the models of
growth being nurtured, the evolving nature of the financial sector, and
the UK’s changing role in the European economic space in the context
set by the vote for Brexit.
This edited collection brings together some of Europe’s most eminent
political economists to address these key questions. Its aim is to stimulate
a reflection on how the financial crisis, the Eurozone crisis and Brexit
have changed the political economies of the UK and Europe since 2008,
and how they alter the conditions for British and European prosperity in
the future. As such, the scope of the book incorporates reflection upon
how recent developments have impacted upon economic instability, the
City of London, inequality, economic governance, and the dynamics of
the UK growth model. The authors draw upon the analytic resources
of the varieties of capitalism debate (if not necessarily that of Hall and
Soskice themselves), as well as their knowledge of British and European
political economy, to make sense of these developments.
This analysis also serves to inform a conversation about progres-
sive politics for the 2020s. What are the prospective progressive politi-
cal strategies which are best attuned to this new economic terrain? What
strategies can nurture new dynamics of prosperity and mitigate social ine-
quality? Can Social Democracy re-invent itself to meet these challenges
or should it now be considered obsolete?
The project from which this book is derived was a collaboration
between the Foundation of European Progressive Studies (FEPS),
the Sheffield Political Economy Research Institute (SPERI) and Policy
Network. The joint mission was to reflect on the changing nature of the
British economy, its place within the European economic space and the
consequences of Brexit, in the context of a series of ongoing crises in
the global economy and the escalation of political unrest. Our ambitious
agenda sought to bring together and better articulate concerns with
the particular structural imbalances characterising the British economy,
the role of the City of London within it, the foundations of British and
European competitiveness, the attempts to coordinate economic govern-

ance at the European level, and the implications of Brexit for each. The
agenda was deliberately inclusive, a breadth justified by the importance
and timeliness of the issues with which we were dealing. This volume,
the final output of the project, retains that breadth and ambition. Each
of the commissioned chapters offers, we feel, a provocative argument
based on significant and original research.
As with any volume of this nature, the book’s empirical scope is
wide-ranging and its analysis multi-tonal. However, four key themes
underpin the collective enterprise, marking out we hope its distinctive
contribution to the existing literature. They are as follows:
• the long-term development of the UK’s growth model and the

potential strategies, both macroeconomic and in the UK business
community, which will ensure competitiveness beyond Brexit;
• the City of London’s role in the architecture of global finance,
its relationship with imbalances and instability in the British and
European economies, the City’s evolution since the global financial
crisis, and the opportunities and risks presented by a Hard Brexit;
• the role of the UK in, and the implications of Brexit for, EU eco-
nomic governance;
• the prospects of social democracy in the midst of a dividing Europe.
In the opening chapter, Andrew Gamble locates the current political-

economic plight of the UK in its proper historical context, charting
the evolution of the UK’s economic growth model and the corner-
stones of its competitive advantage throughout the post-war period.
He details the impact of the loss of empire, various post-war crises and
the influence of successful CMEs in mainland Europe on the UK’s
macroeconomic strategy before contemplating potential post-Brexit
re-
orientations of strategic direction for the UK’s LME. He argues
that three political-economic scenarios are foreseeable for the UK
after Brexit: a ‘soft Brexit’ whereby the UK would remain part of the
European Single Market and capitalist divergence would be limited, the
adoption of an ultra-libertarian Singaporean model entailing the dec-
laration of unilateral free trade, and a protectionist turn which would
profoundly re-shape the character of the UK economy. He considers
the implications of each for the future of British and European capital-
isms and the conditions of existence of each.
In the following chapter, Leila Simona Talani makes the case that the
relationship between the City of London, the Treasury and the Bank of
England (the famous ‘City-Bank-Treasury nexus’ first identified by Perry
Anderson in the 1960s) will ensure that the City of London will con-
tinue to thrive as a global financial centre in spite of Brexit. She argues
that Brexit will allow the financial institutions that together comprise
the City to more credibly threaten to re-locate their operations else-
where, and as such we are likely to see a governmental response which
assuages their fears and compensates for the (still hypothetical) loss of
access to the European Single Market. As such, policy-making in the UK
Treasury and the Bank of England will become even more attuned to the
City’s needs precisely because of Brexit. The implication is that we are
likely to see the protection of the square mile’s competitive advantage,
not its erosion. This would represent the continued privileging of finan-
cial activity over productive activity, and the privileging of capital over
(unskilled or semi-skilled) labour, in UK public policy; the key character-
istic of what Talani refers to as ‘pragmatic adaptation’.
Helen Thompson asks herself why the City of London, given its
pivotal role in the UK’s growth strategy, failed to prevent the referen-
dum on the UK’s EU membership and consequently Brexit itself. The
Conservative Party’s decision to jeopardise the UK’s historical compet-
itive advantage in finance in such a way has been a source of conster-
nation particularly for those who believed that the ‘structural power of
capital’ would prohibit any political outcomes which threatened profit-
ability. Thompson, however, puts forward a compelling three-pronged
case which recasts and, in so doing, resolves this apparent paradox.
Firstly, she argues the City’s interests are no longer as dependent on
Sterling as they were, due to the gradual development of the offshore
Dollar, Euro and Renminbi markets in the 1950s, 2000s and 2010s
respectively. This decreasing importance of Sterling in the City meant
that the interests of the latter were not as bound up with the domes-
tic UK economy as is commonly believed. This in turn provided
David Cameron with more ‘room for manoeuvre’ than he would oth-
erwise have enjoyed when it came to attempting to resolve the divide
on Europe within his own party. Secondly, the City had come to fear
re-regulation and the imposition of additional forms of taxation (likely a
ban on short-selling, rules on bankers’ bonuses and the introduction of
a Financial Transactions Tax) from Brussels as part of the fall-out of the
2008 financial crisis and the subsequent Eurozone sovereign debt crisis.
These crises had exposed the City’s privileged location outside the reg-
ulatory jurisdiction of the Eurozone whilst within the European Single
Market. The City, despite its increasingly politicised status as Europe’s
offshore financial centre, had staved off punitive policies in the decade
following the 2008 crash due to the UK’s monetary sovereignty. Yet
David Cameron during his tenure as Prime Minister was less and less
able to persuade Conservative Party members that he could protect
the City’s interests in the face of mounting pressure from Germany and
France to enforce higher regulatory standards, symbolised by his failure
to ensure an agreement that protected the City when re-negotiating the
terms of Britain’s EU membership in February 2016. In making this
case, Thompson’s analysis of the City’s interests not only demonstrates
the City’s complex relationship with Brexit but also the political difficul-
ties of conducting EU economic governance through multiple overlap-
ping spatial scales with divergent political inclinations.
Lucia Quaglia refocuses the discussion from the City to the UK gov-
ernment’s role in EU economic governance since the 2008 financial
crash. In so doing she examines three related policy areas specifically:
financial regulation, the Banking Union and the Capital Markets Union.
She argues that the UK has actually played a variety of roles in the pol-
itics of EU economic governance in recent years—foot-dragger, fence-
sitter and pace-setter. Accordingly, the classic interpretation of the UK as
an ‘awkward partner’ within the EU (a term coined by Stephen George
in 1990) is in need of revision. This analysis of the political dynamics of
EU policy-making contains significant insights into the prospects of capi-
talist re-structuring after the UK’s formal withdrawal from the European
Union. It suggests that in the institutions of the EU, some policy initia-
tives will lose political support and momentum, whilst others will profit
from being shorn of its primary detractors.
Waltraud Schelkle examines the politics of three of the EU’s post-
2008 crisis management policies—the Fiscal Compact, the European
Stability Mechanism and the Banking Union—to demonstrate the ten-
sions which arose from such policies and to highlight their role in
prompting discontent and disintegration. Utilising the concept of ‘two-
level games’ (Putnam 1988; Bellamy and Weale 2015), her contribution
not only explores the politics of disintegration in the European Union
in the past decade, but also illustrates the collective action problems typ-
ical of an incomplete political union. She argues that the increasingly
centrifugal nature of the EU in this period of crisis has not forged an

ever closer Union, but has instead triggered the dual trends of policy
coordination and fragmentation. In this sense, given the present eco-
nomic backdrop, Brexit may mark the beginning rather than the end
of political re-organisation and indeterminacy inside Europe, and fore-
shadow the increasing variegation of European capitalisms.
Scott Lavery returns to the UK growth model, its conditions of exist-
ence as such, and the strategic dilemmas for British capital created by
Brexit. He describes the existing strategy of British business—acting col-
lectively through the Confederation of British Industry—of ‘extending
and defending’ its interests through the interactions between the British
state and the institutions of the European Union. On the basis of an
extensive empirical investigation, he argues that the CBI has historically
tended to prohibit the development of EU social and employment policy
(‘defend’), whilst building coalitions to further expand trade liberalisation
(‘extend’). However, Brexit throws British business into a state of strategic
disorientation. How do British businesses perceive, and plan to respond
to, changing political-economic conditions? And what are the implications
of their perceived interests for the future of the UK growth model?
In the final section of the book, Angela Wigger and Laura Horn begin
the discussion of social democratic futures. They consider whether the
rise of industrial policy on the political agenda of the traditional parties
of social democracy could signal an upturn in their electoral fortunes;
damaged so significantly in their view by their perceived complicity in
the implementation of austerity measures, a backlash against the neolib-
eral Third Way approach, and the commitment to the European Social
Model. Their analysis of EU industrial policy, however, suggests that it
will be unable to generate either progressive outcomes or greater elec-
toral success. They argue that the specific understanding of competitive-
ness at the heart of EU industrial strategy rationalises the depreciation of
labour costs, reforms to the labour market and lower levels of taxation
levied being on corporations. This policy therefore carries dire impli-
cations for inequality and fails to represent a significant change in the
social contract between capital and labour. Instead, it merely represents
a new phase of post-2008 neoliberal crisis management within the EU
and the latest progressive policy to be co-opted by conservative actors.
Progressive support for it will, thus, only further damage the electoral
fortunes of social democratic parties.
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The next instant it was bang, bang—five times in succession, and
the metal cones buried themselves in that bulk as if it were a
colossal cushion. That the missiles did harm was beyond question,
but they did not stop the advance of the bear. The wounds would
likely prove mortal sooner or later, but not soon enough to save
Alden Payne.
He was on the point of wheeling and dashing off, with no clear
idea of the direction to take, when another report rang out. It was
that of a rifle, whose bullet went straight to the seat of life. With a
snarling growl, the bear reared on his hind legs and clawed at the
wounds made by the revolver bullets, as if he thought they were
splinters which he tried to pluck out.
It was the rifle ball that settled the business. He sagged over on
his side, struck and kicked for a few seconds and then the prodigious
carcass lay still, for he was as dead as Julius Cæsar.
From the same direction that the bear had come, advanced a
Pony Express Rider, with smoking rifle in hand. He had arrived in the
nick of time and could not have asked a fairer target than that
presented by the brute. The man, however, did not know whom he
had saved, until Alden Payne came from behind the boulder and
confronted him. Then he reined up and looked wonderingly at the
youth.
“Who the mischief are you?” he asked, as Alden appeared.
“A young fellow in need of the help you gave.”
“How comes it you’re on foot and in this fix?”
Alden hastily explained.
“So Dick Lightfoot’s dead, eh? Too bad; where did you leave him?”
“Two or three miles back; he was shot from his pony by an Indian
arrow.”
“Where’s his pony?”
“He made off when I sprang from the saddle and hid here.”
“Umph! never run from a bear like that.”
“I never met a grizzly before.”
“And you didn’t meet one this time: only an ordinary black bear.
Why didn’t you use your rifle?” asked the rider, with a glance at the
weapon on the ground.
“My bullets don’t fit.”
The horseman scrutinized the gun.
“Why it’s Dick’s; you didn’t think to take his bullets; I can let you
have a few; you may need ’em before you reach the station.”
He deftly extracted a half dozen which he passed to the grateful
Alden.
“Don’t lose any time in reloading, which reminds me.”
And he proceeded to recharge his own weapon.
During this brief chat, it struck Alden that the man resembled in
looks and voice the rider who lay on the ground several miles away.
The alert manner and crisp way of speaking were the same.
“You are about the weight of Lightfoot and have much his
appearance.”
“Umph! I ought to; I’m his brother.”
He snatched out a small watch and glanced at it.
“I’ll be hanged! I’ve lost six minutes; I must be off; bye-bye.”
He touched the flanks of his pony with his spurs, and the animal
bounded away at full speed. Almost immediately he disappeared.
To put it mildly, Alden Payne was surprised. Here was a man who
received the news of his brother’s death without a sign of emotion,
and yet doubtless he felt it deeply. But it was all a part of the game.
The living brother might pass over the Great Divide in a brief while
and join the other. Such was the life of the Pony Express Rider.
Alden would have liked to ask the man more questions, had time
permitted. He would have turned over the possessions taken from
the fallen man, had he thought of it. He wished to ask him about that
signal smoke which still stained the sky in front and the rider could
have given him valuable suggestions.
It was too late now. The opportunity was gone and the youth must
think for himself. Six or eight miles remained to be traversed through
a dangerous country and he was on foot. The pony had fled and he
doubted whether he could be recovered.
“He has the mail with him and may take it into his head to go to the
station without me,” was the thought of Alden, as he turned back
over the trail. The hoof prints left by the animal showed clearly in the
ground and it was easy to follow them.
A little way and he came to where the open space broadened. His
vision widened and the first survey showed him Dick quietly cropping
the grass, as if nothing unusual had happened to him. His side was
toward Alden, who whistled.
The pony lifted his head, with the blades of grass dripping from his
jaws, and looked questioningly at the youth, who whistled again and
walked in his direction.
It would be interesting could we know what whims passed through
the brain of the animal which was one of the most intelligent of his
species. The Express Riders used so many horses and were forced
by circumstances to shift so often from one to the other, that not
often was any special affection formed between the human and
brute. In other instances, the fondness was deep and the two stuck
to each other whenever and wherever it was possible to do so.
Dick in his own way must have mourned the loss of his master
when he tumbled from the saddle, but he accepted the substitute in
the minute that he appeared, and yielded the same obedience to one
as to the other. Brief as had been the pony’s service, he like his
companions, had imbibed the fact that his one duty in life was to
carry the mail pouches with the highest speed at his command, and
that such service was to be performed under the guidance of the
man who sat on his back.
When Dick, therefore, heard the whistle and recognized the youth,
he paused only long enough to make sure there was no mistake,
and then with a neigh of pleasure, he trotted toward him. As the two
met, Alden patted the animal’s nose and spoke affectionately:
“Good Dick! you’re worth your weight in gold; I should be in a bad
fix without you.”
He sprang into the saddle. He had hardly settled in his seat when
the pony broke into a trot, which quickly rose to a gallop, though it
was not a dead run. That would come very soon.
The observant Alden noted one fact: the horse did not take the
course which he was following when alarmed by the approach of the
black bear. He veered well to the left, thus leaving the carcass out of
sight in the other direction. His kind dread a dead bear almost as
much as a live one.
The action of Dick confirmed what his new master had suspected
from the first: the route to the station was not over a single, narrow
trail to which the riders confined themselves, but covered an area
that gave wide latitude. That he took the path which was taken by
the man who saved him from the bear was one of those providential
occurrences that are more common in this life than most people
believe.
The emigrant trains were disposed to keep to certain paths, where
the face of the country compelled a closing in, but in other sections
the respective courses were separated by miles, and, as has been
shown the parties plodding across the plains, even though their
routes were parallel, were often so far apart that for days they saw
nothing of one another. Even the twinkle of their camp fires were too
far over the “convex world,” to be visible.
Alden Payne could not free himself from the belief that it was safer
to hold Dick down to a moderate pace than to give him free rein. The
mail was already hopelessly behind time,—a fact which did not
concern him—though he was determined to deliver it at the station if
it were possible for him to do so. This could be done before dark with
the pony on a trot or walk.
The feeling of the young Express Rider was natural. When
drawing near a point where danger is suspected, we prefer to do so
at the most guarded pace. With all of Dick’s sagacity he was more
likely to go wrong when on a run than when on a walk.
The animal must have felt much as did the trained dog, who,
having pointed a bird, was picked up by his new and sympathetic
master and carried off the field, under the belief that he had been
suddenly taken with cramps. Dick gathered his hoofs several times
and broke into an impatient gallop, only to be drawn down again to a
trot which finally dropped to a rapid walk. He gave up the dispute in
disgust and by his action said:
“All right; if you think you know more than I do, you may run
things.”
It did not add to Alden’s serenity of mind to notice that the course
was gradually shifting to the left, and finally led directly toward the
brush of smoke which still stained the blue tinted sky.
All manner of thoughts crowded upon him. The one hopeful truth
was that the living Lightfoot had come over the route unharmed
within the last hour. It would seem that Alden ought to be as
fortunate as he. Ah! if he had only had time to question the rider who
might have passed through a brush with the redskins!
Another fact gave basis for vague hope: a scrutiny of the whole
horizon showed no answering signal. When Indians resort to such
telegraphy, as they often do on the plains and among the mountains,
there are calls and replies. It is on record that on one occasion the
news of the signing of an important treaty at Washington affecting
the Sioux was known to that tribe before the telegraphic messages
could reach the army officers at the reservation. It was carried
westward by Indian telegraphy which none of us fully understands,
except that it seems to be through signal fires from elevated
positions. But in that case, there must have been smoke or blaze
visible at different points, as we know was really the case.
But Alden Payne saw only the shadowy wisp of vapor in front of
him, and must wait to learn its full meaning. That knowledge could
not be long in coming.
CHAPTER XVI
CAUSE AND EFFECT
A lden was convinced from a study of the signal smoke that it was
gradually fading, as if the fire which caused it was not
replenished. What this signified, as well as the meaning of the
display itself, was beyond him.
When the interval between him and the danger point had dwindled
to an eighth of a mile, Dick did an almost incredible thing. Until then
he had shown no sign of seeing the warning. Suddenly he stopped,
raised his head, thrust his ears forward and looked steadily at the
thin column of vapor for several minutes. The reins lay on his neck
and the rider did not touch them.
The animal wheeled abruptly to the right and broke into a gallop.
His action showed that he read the signal smoke aright. Indians were
there and he must avoid them.
“I shall not interfere again with you,” said Alden admiringly; “you
know a hundred times more than I do of these matters.”
None the less, our young friend was uneasy. With all the pony’s
sagacity, it would not have been strange if he was outwitted. The
dusky enemies must have believed it was an experienced Express
Rider who was coming from the east, and it would seem likely to
them that he would direct his pony as the animal was now directing
himself. If so, the precaution could hardly be of avail.
The ground rapidly changed in character. Before Alden looked for
it the incline increased, and he was riding among boulders, rocks
and dwarfed pines. He felt a coolness too in the air, though the ridge
did not rise anywhere near to the snow line. Looking down at the
ground he saw no signs of others having passed the way before him.
He was the pioneer in that dismal solitude.
He was glad when the pony of his own accord dropped from the
gallop to his rapid, graceful walk. It was impossible for him to
progress in a straight line, and he was forever turning to the right or
left, rarely following a direct course for more than a few rods.
Alden could not help smiling when it looked for a moment as if
Dick had suddenly reached the end of his rope. He came opposite a
mass of rocks, amid which the twisted pines pushed out in all
directions, though ever striving to reach the vertical with their tops
pointed toward the zenith. To the right and left, the flinty boundary
extended beyond sight.
Without hesitation Dick turned to the left and walked briskly for a
dozen rods. The barrier still interposed. He stopped, wheeled about
and retraced his steps. He was searching for an opening or small
pass, and was not satisfied to approach any closer to the Indian
signal.
Within less than the distance named, to the right of his first turn,
he found that for which he was looking. A gap showed and he
entered it as if it were a stable door that had been opened for him.
“What’s the use of placing a rider on your back, Dick?” asked the
delighted Alden. “Better to give you the mail pouch and tell you to
deliver it at the next station. But then mighty few ponies know as
much as you.”
How far this path led remained to be seen. But it had not been
followed far when Alden met an experience that was as unique as
unexpected. The appearance of the gorge suggested that a torrent
of water poured through it, when the snows melted or the floods
descended. Its width varied from fifty feet to two or three times that
extent, and the irregular walls rose on each side almost as many
feet. If the course lasted, it could not be more favorable.
The bottom of this peculiar ravine was broken at intervals by
stones, and then only pebbles showed. It would have been easy for
Dick to dash through on the gallop which seemed to be his natural
gait, for it was comparatively level, but he chose of his own accord to
walk. He was traveling round instead of crossing lots, as he had
been accustomed to do, and the incident promised to prove another
illustration of the proverb.
And then came the surprise. Dick had turned one of the many
corners, his head dipping with each vigorous step, when he flung up
his nose and snorted. The alert Alden in the same instant saw an
Indian warrior coming toward him.
The redskin was a duplicate of the one who had launched an
arrow at the youth several miles back. He had the same squat,
sturdy figure, the coarse black hair dangling about his bare
shoulders, and growing low upon his forehead, the naked chest, the
frowsy hunting shirt of deerskin, with leggings and dilapidated
moccasins. He carried a knife in the girdle about his waist, and his
right hand grasped a heavy bow as long as himself. Behind his left
shoulder the feathered tips of a number of arrows showed where he
carried his quiver.
Neither the countenance nor chest displayed any of the paint of
which the American Indians are fond. It may be doubted whether the
vari-colored daubs would have added to the hideousness of that
face, which was broad with protuberant cheek bones, an immense
mouth, low forehead and piercing black eyes.
Never was a meeting between two persons more unexpected by
both. The Indian emitted a startled “hooh!” and stopped short, as if
transfixed. As late as the days to which I am referring hundreds of
the western red men used the bow and arrow instead of the rifle.
This was generally due to the difficulty of obtaining the modern
weapon, but in many instances it was choice on their part. It may be
questioned whether in the majority of cases, one was not as effective
as the other.
The particular red man in whom we are now interested had a
formidable bow at command, and no doubt was an expert in its use,
but before discharging an arrow, he must snatch it from behind his
shoulder, fit it to the string and aim. Ere he could do all this the white
youth could bore him through a dozen times had he possessed that
number of guns. He had one which in the circumstances was as
good as the larger number.
Dick at sight of the redskin had also stopped. Thus he and the
savage faced each other as if the two were carved in stone. Alden
was quickwitted enough to bring his rifle to his shoulder and aim
between the ears of his pony. There was no mistake about it: he had
“the drop” on the other fellow.
And that other fellow knew it. He had been trained never to give or
ask quarter, and he did not ask for it now. Instead, he whirled about
and dashed off in a wild headlong flight. There was something
grotesquely comical in his performance, for instead of running in a
straight line, he leaped from side to side, stooped, dodged, and then
straightened up for a few seconds, during which his speed was
amazing. He did not utter a sound, but no miserable wretch ever
strove more desperately to escape the doom which he expected with
every breath he drew.
Alden read the meaning of the odd actions. It was intended to
distract his aim. Few Indians are fools enough to resort to the trick,
but the Digger tribe sometimes do so.
When the warrior made off, Dick with a faint snort did the same.
He was in pursuit, and since no man ever lived who could outrun a
good horse, little chance was left for the fugitive.
Alden could have brought him down within the same moment that
he stopped. Most men in his situation would have done so, but the
whole thing was abhorrent to the youth. Only in self-defense would
he shoot a human being, as he had proved weeks before.
“I don’t want your life; if you will get out of my path I won’t hurt
you,” was the thought of Alden, who lowered his gun, but held it
ready to use on the instant it might become necessary. He feared
that because the shot was delayed, the Indian would turn and try to
use his bow. In that event, the youth would fire to kill.
He held himself ready to anticipate hostile action. He was so close
to the fleeing warrior and the air was so clear, that every trifle about
the fugitive was noticed. He observed that the sole of his right
moccasin was partly gone and flapped as he ran. Most of the ragged
fringe at the bottom of his shirt had been torn off, but a piece kept
fluttering about and hitting against his hip. The red men of the West
generally wore different clothing from the one described, but the
fugitive suggested a descent from those of his race who lived east of
the Alleghanies.
Alden noted the play of the muscles between the shoulders, where
they were not hidden by the bouncing quiver. The American Indian
as a rule is deficient in muscular development, but this one showed
several moderate ridges that doubled and shifted in response to the
rhythmic swinging of his arms. Each was bent at the elbow with the
hand close to the chest, like a professional runner, but the right hand
was empty, while the fingers of the left were closed about the huge
bow which he was obliged to hold diagonally before him, to prevent
its interference with his running. The tousled head was pushed
forward, and at intervals the redskin looked back. The glare of his
black eyes through the meshes of flying hair suggested an owl
peering from behind a thicket.
Those backward glances were only for an instant but were
continually repeated. The swarthy face showed the terror of the
fugitive, who must have wondered why the fatal shot was delayed.
Perhaps he thought his pursuer meant to make him prisoner—a fate
dreaded as much as death itself.
The Indian ceased his side leaps and ducking, and gave the last
ounce of his strength to flight. He was running extraordinarily fast,
but you do not need to be told that he steadily lost ground before the
rushing pony. It was impossible for the man to get away by means of
direct flight.
Meanwhile, queer thoughts must have bothered Dick. He had
brought his new master within easy striking distance of his enemy
and he did nothing. Why did he not shoot and close the incident?
Why did he wait till the brief space was lessened still more?
The watchful Alden suddenly saw the right hand of the fugitive dart
over to the left shoulder, where the fingers fiddled for a moment.
Then they snapped out an arrow from the quiver and the missile
vanished, as it was brought round in front of his chest. Since the
white man held his fire, the red one meant to use his own weapon.
At the instant the Indian began fitting the shaft to the string while
still running, Alden shouted at the top of his voice. It was a warning
which was understood and went through the fugitive like an electric
shock. He bounded several feet in air, and dropped the arrow to the
ground, but he did not lessen the haste with which he was speeding
in order to pick it up.
All this occupied but a few brief minutes. The disgusted Dick had
carried his rider to within ten feet of the fugitive and now eased his
pace. The respective speed of each was the same. The pony had
done his part and refused to do more.
Alden Payne decided upon his course at the beginning of the race.
He would maintain the pursuit, allowing the Indian to hold his place a
little in advance until the end of the gorge was reached and the
wretch had the chance to dart aside. This, however, was not the end
of the most peculiar occurrence.
In his panic the redskin attempted the impossible. Fancying the
pony was upon his heels, and his rider about to reach over and seize
or strike him, he made a turn to the right, leaped high in air and
grasped the end of a projecting ledge of stone. Then with the same
fierce haste as before, he strove to draw himself over the edge to the
narrow support above. He succeeded, for the task was not difficult,
but there was not enough space to hide any portion of his body. He
had room barely to stand, and Alden could have picked him off as
readily as when he was fleeing before him. The poor wretch shrank
as close as he could against the wall and cowered and glared and
awaited the bullet.
And Alden Payne, instead of harming him waved his hand and
shouted:
“Good-by, old fellow! Give my love to your folks.”
It was a strange piece of jocularity, but the genial hearted youth
doubted whether it would be appreciated. Having gone by the warrior
he left him in the best possible position to discharge one of his
missiles, and according to the general rule, that is what he would
have done.
Much has been said and written about the gratitude of the
American Indian. That he sometimes displays that virtue cannot be
denied, but among the wild tribes of the plains, or Southwest, the
rule is the other way. I have referred to this elsewhere. The first
person an Apache strives to kill when the chance offers is he who
has given him bread and drink. He is as quick to bite the hand that
has fed his hunger as a rattlesnake is to strike the foot that crushes
him.
It is a pleasure therefore to tell the truth regarding the Indian
(whose tribe Alden Payne never learned) that had been spared by
the amateur Pony Express Rider. He might have made it bad for the
youth who was riding from him, and who as a consequence could
not keep an eye upon his every movement. When Alden looked back
as he did several times, he saw the warrior still on his perch, and
watching him, but the huge bow in his hand was not raised nor was
another arrow drawn to the head, while the horseman was within
reach of the primitive weapon.
This strange situation could last only a brief time. The speed of
Dick rapidly carried him and his rider beyond reach of any bow and
arrow ever devised. The gorge remained comparatively straight for
quite a way, and the mutual view lasted longer than would have been
the case either earlier or later.
Alden was not yet out of sight of the Indian when he emitted a
series of tremulous whoops, the like of which the rider had never
before heard on his journey across the plains. The first sound was
an explosive shout, and the half dozen which succeeded trailed off
into silence. The redskin made this strange outcry three times and
then ceased.
“I suppose he means that as a reply to my salute,” laughed Alden,
who the next minute whisked beyond view around a turn in the
gorge. “If I knew how to reply I should do so, but we’ll have to wait till
next time.”
Dick showed no disposition to slacken his pace and his rider did
not restrain him. Just after making the turn referred to Alden turned
his head. What led him to do so he could not explain since he knew
he was clear of the warrior whom he had nearly scared out of his
wits, but he saw an amazing sight. The varying character of the
gorge showed a projecting mass of stone on the right near the top. It
was at a wide part of the ravine, and the peculiar shape of the rocks
left a partial cavity behind the jutting portion large enough to hold
several persons.
And in this depression three Indians, looking much like the one he
had left out of sight, had evidently just risen from the ground and
stood motionless as if watching him as he skurried from them. They
must have been there when he rode beneath within fifty feet of
where they were lying in ambush.
Alden was dumfounded. What could it all mean? After watching
and probably signaling they had waited till he rode right into the trap
and then had allowed him to ride out again, unharmed and all
unsuspicious of his peril.
“That is too much for me,” mused the perplexed youth; “I spared
one of them when I had him dead to rights, but why should those
three spare me? That isn’t the way—”
Could those odd sounding signals which the single warrior sent
forward from his perch on the rocks have had anything to do with it?
Did they cause the forbearance of his comrades farther up the
gorge? That such should be the case seemed incredible, but days
afterward Alden submitted the question to Shagbark. The veteran
stroked his whiskers, puffed his pipe for a minute, and then squinted
one eye.
“Thar’s only one way to explanify it,” he answered; “the varmint
whose scalp ye left on top of his head was so thankful that he
signaled ahead to the other three varmints not to hurt ye, ’cause ye
and him war friends.
“I’ll own that that ain’t the gin’ral style of the critters, but sometimes
they act jest as if they war white men, and better than some white
men I’ve met.”
CHAPTER XVII
AT THE STATION
D ick the pony held his swift gallop for a half mile farther, when he
debouched into an open country, similar in many respects to that
which he had left behind him. While it could not be called level, it
showed no steep inclines and the masses of rocks and heaps of
boulders were readily flanked by the superb courser.
The plucky animal let himself out immediately and the admiring
Alden still allowed the reins to lie on his neck.
“You need no orders from me, old fellow,” said he; “when the
history of the Pony Express is written, more credit should be given to
you and your comrades than to some of the men who sat in the
saddles.”
The ridge which caused Alden anxiety had been crossed, and now
when he looked back he traced the outlines of the vague column of
smoke that was slow in dissolving in the summer air. Surely nothing
more was to be feared from that source. No matter how well
mounted a party of Indians might be, none could overhaul the
peerless Dick, whose graceful legs were again doubling under him
with marvelous rapidity and carrying him and his burden as an eagle
bears its eaglet on its broad back.
“Now, if I should have a flat sail on my right and left like a kite,”
mused Alden, giving rein to his whimsical fancy, “this speed would lift
us clear and we should skim through the air like a swallow. We
should have to come down now and then, when the hoofs would give
us another flip upward and away we should go. I’ll make the
suggestion when I get the chance.”
Suddenly he caught sight of a buck coursing in front. Where he
came from he could not guess. Dick must have headed for him
without either being aware of the fact, until the horse was almost
upon the creature.
The latter kept up his wild flight for several hundred yards when he
was terrified to find that man and horse were gaining upon him. Then
the buck showed a gleam of sense by bolting to the right. He made
astonishing bounds and skimmed with arrowy speed, but it was less
than that of his pursuer. Was there any creature of the plains which
could surpass the half-bred mustang? No.
Alden wondered whether the pony would change his course and
press the pursuit of the game, as almost any one of his species
would have done in similar circumstances. But Dick did not vary a
hair until he confronted another pile of rocks. Instead of flanking
them on the same side with the buck, he whisked in the other
direction. What was a whole herd of deer to him? He carried the
United States mail and everything must give way to that.
From the moment that Alden saw the buck bounding in front of
him, he could have brought him down without checking the pony. But
he did not raise his rifle. To have fired would have been as wanton
an act as the slaughter of the hundreds of thousands of buffaloes
during the few years that followed.
He was convinced that Dick was again going at the rate of twenty-
five miles an hour. He would not have been surprised had the speed
been even greater. That, however, was hardly possible. Again the
still air rose to a gale and the velvety thumping of the delicate hoops
was bewildering in its swiftness. He sat firmly in the saddle, leaning
slightly forward and now and then jerking down his hat which was in
danger of being whisked off by the wind.
“What’s the use, Dick?” asked Alden. “Why not take things easier?
But to do that would be to rob you of your enjoyment. Helloa! there’s
something new!”
He was coursing over the undulating ground, when his gaze
rested on a building half a mile away and in the line of Dick’s run. It
was a low, flat structure of logs, such as is often seen on the frontier.
At the rear was a covered inclosure and from the rough, stone
chimney, built at one end on the outside of the main building, rose a
spiral of smoke—proof that the cabin had occupants.
“It’s the station!” exclaimed the rider the next moment. He
observed three men standing in front, with a saddled horse near
them. Evidently they were watching his approach.
It was the rule among Pony Express Riders that upon arriving
within a half mile of a station, they should proclaim the fact by giving
the “coyote yell.” This was notice to their friends to have a fresh
horse ready, for it must be borne in mind that the minutes were
precious. As the panting animal dashed up, his rider sprang from the
saddle before he had fairly halted and ready hands helped secure it
to the back of the waiting horse. The messenger leaped like an
acrobat into place, caught up the reins, touched with his spurs the
flanks of the animal, which instantly responded with a bound, and
was off on a headlong run.
Often the rider snatched up the lunch that was waiting him, and
ate while his horse was going at top speed. He shouted back to his
cheering friends, with whom he had exchanged a few hurried words
and the next minute was beyond hearing.
Such was the rule while the rider was making his run. Generally
the stations were twelve or fifteen miles apart, and the ride of a one
man was thirty or forty miles. This compelled two changes such as
described, after starting on his furious race. At the end of his “stunt,”
the new man, freshly mounted was awaiting him. The pause after the
arrival of the courier was just long enough for the saddle and mail
pouches to be transferred, when the relief sped away for the next
station, and if all went well, completed his task in schedule time.
The stations as has been stated were scattered over a line nearly
two thousand miles long, through the wildest and most dangerous
section of our continent. This distance had to be covered in eight
days, which was an average of two hundred and fifty miles a day, the
like of which had never been known before and probably will never
be known again. We recall that the number of these stations
between Sacramento and St. Joseph, Missouri, was a hundred and
ninety. No regular intervals, however, could be established, for a
great deal depended upon the physical nature of the country. From
what has been already said, it will be understood that a horseman
often had to do double duty because of some accident to his partner.
Thus more than one Express Rider covered two and in a few
instances three hundred miles never leaving the saddle except for a
minute or two when changing horses. While the system was
wonderful in its completeness, many breaks were inevitable.
The three men who were standing in front of the squat cabin were
Tom Harper, Tim Jenkins, and Gideon Altman. A brother of the last
named was absent hunting game for the larder of the establishment.
The first named—Harper—was wiry and slight of frame, while the
other two were of ordinary stature. Harper was a rider, but the weight
of his comrades shut them out, except in case of necessity.
Dick Lightfoot who had reached his “last station” a dozen miles to
the eastward, was due at the present place in time to meet his
brother, whom Alden encountered at the time of his flurry with the
bear. The men at the station knew that some accident must have
befallen Dick and were therefore on the watch, when they descried a
stranger coming toward them on the pony which they recognized as
belonging to the missing rider.
Dick was in a lather and his sides heaved. Alden did not dismount
but looked down in the faces of the group who scrutinized him
keenly. Tim Jenkins, massive and heavily bearded, acted as speaker
for his comrades.
“Who are you?” he demanded of Alden, who gave his name.
“Where’s Dick Lightfoot?”
“He was killed by Indians eight or ten miles back.”
“How do you come to be mounted on his pony?”
There was an aggressiveness in the tone and manner of Jenkins,
but Alden ignored it. The circumstances warranted suspicion. So he
told his story as succinctly as he could. The three listened closely,
and must have felt the truth of the words of the youth whose looks
and personality pleased them.
“You’ve got grit, young man,” commented Jenkins; “did you have
any idea of the risks you had to run?”
“I saw Alexander Carlyle the first rider start from St. Joe last April,
and on our way across the plains I have exchanged a few words with
others. I knew it wasn’t any child’s play.”
“You’re right—it isn’t. Poor Dick! it will be a sad blow to his brother
Sam. I suppose your friends will look after the body when they come
up to it?”
“There’s no doubt of that; I sent word to Shagbark, our guide, who
would do it without any such request from me.”
“Shagbark, eh? So he’s your guide; well, there isn’t a better one in
the West than he; that’s what Kit Carson has said many a time and
he knows. See here, my young friend, what’s the use of your staying
in that saddle? Your pony doesn’t go any farther.”
“But I should like to do so.”
“Tom Harper is here to take the place of any chap that gets
knocked out.”
“Why not let me complete the run?”
The three men looked in one another’s faces and smiled
significantly.
“Do you really want to try it?”
“Nothing can suit me better.”
“You have never been over the route.”
“I have never been over the run just finished; I left everything to
the pony and he did not go astray.”
Alden did not think it worth while to tell of his adventure in the
gorge while coming through the ridge.
“You’re correct as to the ponies; all of them have been over the
road long enough to become familiar with it. What do you say, Tom?”
asked Jenkins, turning to the relief rider.
“Well, I ain’t partic’lar,” replied the wiry fellow, who despite his
youthful looks, was a veteran of the plains; “I expected to ride, if
anything happened to Dick, but this young chap seems to have set
his heart on it and I don’t want to spoil his fun.”
Alden’s eyes sparkled. Having begun the run, almost from the
beginning, he was ambitious to complete it.
“Then it’s settled,” said he, dropping from the saddle, and stepping
across to the waiting animal.
“Hold on a minute,” interposed Jenkins; “being as you ain’t a
reg’lar you needn’t be as strict as they have to be.”
“What do you mean?” asked the puzzled Alden fearing that he was
to be subjected to some vexatious handicap.
“It’s a good fifteen miles to the next station and most of the way is
so rough that your horse will have to walk; there are a few stretches
where you can let him out, but, for all that, you won’t reach the
station till well into the night.”
“What of that?”
“You need rest.”
“I’m not tired,” persisted Alden, afraid that the men would change
their minds.
“That may be, for you haven’t had much of a ride yet, but it is
nearly dark; you must eat supper with us.”
“You are kind, but have we time? The mail is already late.”
Jenkins threw back his head and laughed. His mirth was so
unrestrained that his comrades and even Alden smiled in sympathy.
“If you want a job I’ll recommend you to Colonel Majors. I saw from
the way you rode when you came in sight that you understand the
business.”
“How much are we behind the schedule?”
Jenkins drew out a big silver watch whose ticking could be heard
by all. He squinted one eye and studied the figures.
“A little more than an hour: it’s no hanging matter if you make it
two or three hours more.”
The action of the man reminded Alden that he had the watch and
papers of Dick Lightfoot in his possession. He took them out and
explaining the matter, handed them to Jenkins.
Had the youth been given his choice, he would have resumed his
ride without another minute’s delay, but to refuse the invitation might
offend. Moreover, he was hungry.
“Your advice is good and I am thankful to eat with you.”
Four men made their quarters at this lonely cabin. One of them
was an extra rider for emergencies, while all, as has been said,
could perform the duty if required. Such supplies as they needed
were sent to them by their employers. Russell, Majors & Waddell
were the proprietors, who made their headquarters in the east, while
Bolivar Roberts was superintendent of the western division. In
Carson City, Nevada, he engaged the fifty or sixty riders needed,
and he and the firm looked carefully after their employees.
Since nearly all the stations were in the midst of superb hunting
grounds, the men at the remote posts obtained a large part of their
food by means of their guns. It was a pleasant variation of the
monotony, and the spice of danger from prowling redskins gave zest
to their enjoyment.
Dick having been unsaddled was turned out to graze with three
others. In the inclosure at the rear of the cabin, these were gathered
at night or during stormy weather, and one or two were always in
readiness for the regular riders. The horse which Alden was to ride
for the next station was allowed to wait, saddled and bridled, and
ready to start the moment called upon.
Alden followed his friend into the cabin, with Harper and Altman at
his heels. Leaning his rifle against the logs by the door, he glanced
around.
The dwelling could not have been of simpler structure. The single
room was some twenty feet square. At one end was an old
fashioned fireplace, in the middle of which stood a small cooking

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Diverging Capitalisms: Britain, the City of London

The Coming Crisis 1st Edition Colin Hay

The City of London and Social Democracy: The Political

Biota Grow 2C gather 2C cook Loucas

The King s City A History of London During The

Why Europe matters for Britain : the case for remaining

On fantasy island : Britain, Europe and human rights

Re-envisioning Theoretical Psychology: Diverging Ideas

The Statesman and the Storyteller: John Hay, Mark

More information about this series at

Building a Sustainable Political Economy: SPERI Research & Policy

Library of Congress Control Number: 2018959878

their joint project ‘Diverging Capitalisms? Britain, the City of London

Brussels, Belgium Dr. Ernst Stetter

We owe a debt of gratitude to many people who were instrumental in

1 Introduction: Brexit and European Capitalism—A

2 After Brexit: The Past and Future of the Anglo-Liberal

3 “Pragmatic Adaptation” and the Future of the City

4 The Limits of the City’s Structural Power: The City’s

5 European Union Financial Regulation, Banking Union,

6 Integration and Disintegration: Two-Level Games

7 The UK’s Growth Model, Business Strategy and Brexit 149

8 The Bed You Made: Social Democracy and Industrial

9 Unusual Bedfellows? The IMF, Tackling Inequality

Daniel Bailey Political Economy Centre, University of Manchester,

Table 3.1 Frieden’s model 56

Introduction: Brexit and European

Colin Hay and Daniel Bailey

In the early 1990s it was de rigueur to argue that the challenge of

© The Author(s) 2019 1

in—the interstate competition for internationally-mobile capital if

matched in all likelihood by political-economic change within the EU

Instead of doing what we’re normally doing in the trade negotiations –

Yet Theresa May appears cognisant that the strategic considerations

This is to say nothing of the environmental threats to European pros-

models be based on sustainable foundations of competitiveness? Is redis-

European competitiveness, the attempts to coordinate economic govern-

• the long-term development of the UK’s growth model and the

In the opening chapter, Andrew Gamble locates the current political-

centrifugal nature of the EU in this period of crisis has not forged an

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