The current financial crisis raises fundamental questions about the alleged merits of globalization. Britain’s current plight illustrates this strikingly.

Britain’s long, much-praised boom was based upon our much-vaunted competitive advantage in service industries, above all in the financial sector. It did not matter, it was said, that we had small manufacturing sector and imported most everyday consumer goods, because our high-level expertise gave us the wealth to buy these things from economies that could produce them at much lower cost.

As a result of the financial crisis, major financial institutions have become insolvent or at risk of collapse and public funds have been required in order to stabilise the system. Britain’s premier service industry can no longer claim to be the robust front-runner of the economy it once did. Furthermore, the feted expertise and creative panache of investment bankers looks less convincing than it did. Much of the boom, it has emerged, was based upon high-risk investments and elaborate stock-value gambles whose yields eventually began extensively to fall short of expectations. A more prudent and old-fashioned investment model now looks cleverer than the proceedings of recent times.

This leaves Britain’s service sector economy with its leading sector badly weakened in economic power and prestige, with its strident demands for minimal regulation refuted by events and the widely –accepted need for pro-active government intervention.

This leaves the rest of Britain’s economy-leading service sector and the country’s wider prospects on the global stage planted on a fast-shifting sandbank. At the root of this lie the sharp contrasts between the nature of the jobs in the upper echelons of the service sector and that of the vast bulk of service jobs done by millions of British workers.

In most service jobs, the service provided by the worker involves merely facilitating use by the customer of a piece of advanced technology. The passenger pays for the temporary use of a railway, consisting of a large set of manufactured goods. The train drivers and station staff merely facilitate this. The customer phones up for information processed on a large corporate computer built from solid hardware and tangible software expertise, while the call-centre worker does little more than read the information out. When a shopper goes to buy the latest sophisticated gadget the shop assistant’s role is largely confined to processing the purchase. It is only at the very top end of the service industry, such as in the law, medicine or accountancy, that it is predominantly the skill of the individual service provider that one is paying for.

In the greater part of the service sector, the service worker contributes only a small proportion of the value of the service provided. It is above all the technology that they provide access to that holds the predominant value in the transaction.

The low level of value added by the rank and file service sector worker is reflected in the fact that the wages for the majority of British workers are punitively low in relation to the cost of living . In addition, the gap between these incomes and the well-off is very great.

These factors lend firm support to the view that an economy simply cannot generate enough wealth to ensure a robust level of income for most without making real concrete objects that offer substantial added value to the purchaser.

But what, exactly, should Britain manufacture? For one thing, what it most certainly and with urgency ought to be doing is embarking upon the large-scale making and installation of off-shore wind turbines. Britain has the greatest wind resources in Europe, and is surrounded by shallow seas well suited to this.

It is unlikely, however, that this would be enough to turn Britain into a high value-added economy. Moreover, China and the other export-led developing economies have already gone beyond simpler mass-produced items and before long are likely to rival British capabilities in renewables at prices which, because of our labour costs, we cannot match.

Many of our European partners have avoided going nearly so far down this road towards a labour force made up of a high-earning minority and a majority on stagnant earnings in low value-added occupations. They have done so by maintaining a robust manufacturing, exporting sector.

However, the inexorable logic of competition from the developing economies is that free trade will enable them to make increasing inroads into most spheres in western Europe that produce the high value-added real objects of manufacturing and software design. If they do so, these economies will become hollowed out as those sectors shrink, a process which Britain has followed furthest.

Eventually, it must become clear to policy makers that maintaining our wealth depends upon maintaining our capacity to make real objects that people need and want to buy. At that point, it is likely that there will emerge a mounting tide of calls for targeted tariffs to protect the most valuable industries. This would run counter to EU economic orthodoxy, but this is an orthodoxy that could well be overturned.