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About this book

It is commonplace to assume that the twentieth-century British economy has failed, falling from the world's richest industrial country in 1900 to one of the poorest nations of Western Europe in 2000. Manufacturing is inevitably the centre of this failure: British industrial managers cannot organise the proverbial 'knees-up' in a brewery; British workers are idle and greedy; its financial system is uniquely geared to the short term interests of the City rather than of manufacturing; its economic policies areperverse for industry; and its culture is fundamentally anti-industrial. There is a grain of truth in each of these statements, but only a grain.

In this book, Alan Booth notes that Britain's living standards have definitely been overtaken, but evidence that Britain has fallen continuously further and further behindits major competitors is thin indeed. Although British manufacturing has been much criticised, it has performed comparatively better than the service sector.

The British Economy in the Twentieth Century combines narrative with a conceptual and analytic approach to review British economic performance during the twentieth century in a controlled comparative framework. It looks at key themes, including economic growth and welfare, the working of the labour market, and the performance of entrepreneurs and managers. Alan Booth argues that a careful, balanced assessment (which must embrace the whole century rather than simply the post-war years) does not support the loud and persistent case for systematic failure in British management, labour, institutions, culture and economic policy. Relative decline has been much more modest, patchy and inevitable than commonly believed.

Table of Contents

1. Introduction

Abstract
From being the world’s dominant nation at the turn of the twentieth century, Britain entered the new millennium as a moderately successful, medium-sized, post-imperial power, unable to decide whether its best interests lay with Europe or North Amer-ica. Britain’s strength in 1900 rested upon military and strategic conditions that we now believe to have been transient. Britain’s international position also rested upon the comparative power of its economy, but there has been no real agreement about how the British economy should or could have performed in the twentieth century. The vast majority (but not all) believes that the economy should have been stronger, but no-one has ventured to estimate Britain’s feasible growth rate. Economists, historians, political scientists and other social theorists have contributed to these debates. Until comparatively recently, reliable assessments of this diverse and specialised literature were few. Since 1990, however, the number of textbook treatments has multiplied and readers now have an extensive choice. This volume does not pretend to be a comprehensive analysis of Britain’s twentieth-century economy. In the space available only the main themes can be identified and the barest outlines given.
Alan Booth

2. Economic Growth and Welfare

Abstract
This chapter examines Britain’s growth record and suggests that the notion of relative decline needs to be handled with more care and sophistication than hitherto. More and more countries did indeed surpass British living standards during the twentieth century, but they did not power ahead as the ‘declinist’ literature has assumed. At the end of the century living standards in France, Germany, the UK and the USA stood in almost exactly the same relative position as at the end of the ‘golden age’ in 1973, and the relative gap between British and US living standards had changed little since 1950.Much of the analysis of Britain’s relative decline has been predicated upon more or less abject performance by manufacturing industry and, although there were obvious signs of relative deterioration against European countries between 1950 and 1973, in the longer term the main problems in fact resided elsewhere. The standard analytical tools of convergence, institutional failure and supply-side weaknesses in manufacturing are not well designed to understand British economic performance in the longer run. Despite the problems, the British economy delivered substantial improvements in material welfare for the vast majority during the twentieth century, but there were very clear and disturbing signs that a substantial minority had been excluded from the benefits of economic growth after 1967.
Alan Booth

3. Britain’s Place in the World Economy

Abstract
There is no denying the fundamental changes and diminishing influence of Britain’s role in the international economy in the twentieth century. Britain began the century as de facto manager of the systems of international finance and trade. At the end of the century the City of London continued to play a major role in the world economy and British multinational companies had carved an important niche for themselves in world production and commerce, but Britain’s international standing had waned. We know that the position in 1900 was based upon transient factors that were already beginning to disappear as bigger economies with more natural resources drove towards economic maturity. The question, as with the discussion of the growth rate, is whether Britain’s decline needed to be quite so steep and spectacular. Those with experience of the years between 1930 and 1980 will be acutely aware of what external frailty means. Even those whose memories extend only to ‘Black Wednesday’, 16 September 1992, will recall the sense of national failure that accompanied formal devaluation (also experienced in 1919, 1931, 1949, 1967 and 1972).Rather surprisingly, Britain made fewer efforts to shelter from the dull, continuous ache of external weakness and the public humiliation of devaluation than any of its major rivals.
Alan Booth

4. Industry, Entrepreneurs and Managers

Abstract
The two previous chapters have tried to establish three basic points about British economic performance in the twentieth cen-tury. First, the historiography has been obsessed with the theme of decline, and deeply entrenched supply-side deficiencies in the manufacturing sector have been presented as the main source of weakness. Second, recent long-run and comparative research on manufacturing performance has undermined the idea that Britain’s living standards were overtaken because of British manufacturing failure. There is evidence of weakness since the late nineteenth century, but problems seem to have been addressed sooner or later and signs of the progressive deterioration of British manufacturing are conspicuously absent. Finally, there are some grounds for arguing that British manufacturing trade performance has been rather harshly judged, especially during the golden age. This is not to claim that from 1900 the British economy was dynamic, powerful and successful but rather to try to establish a more balanced framework for judging economic performance. The first step in a more balanced assessment must be to establish the patterns of sectoral and industrial change and the main outlines of comparative performance.
Alan Booth

5. The Labour Market, Unions and Skill

Abstract
The second element of the ‘British disease’ to attract attention has been the British labour force, with its distinctively decentralised and fragmented structure, its apparently antagonistic attitudes to management and its vigorous exploitation of bargaining strength during the long boom. This chapter begins by sketching the broad outlines of change in the labour market during the twentieth century and then looks in turn at debates on unions and pay, productivity and skill. The chapter concludes with a brief overview of unions and the ‘British disease’.
Alan Booth

6. Government and Economic Policy

Abstract
The twentieth century saw a major expansion of the role of government, both as a producer of goods and services and as a regulator and stabiliser of the national economy. Controversy has raged for more than 250 years over the proper role of government in British political economy, and it was especially fierce during the twentieth century. These ideological, doctrinal and sectional struggles left unresolved, however, even the basic question whether the state is fundamentally the solution or the cause of national economic problems. The summary of Allen’s (1979) polemic, to which attention has already been drawn, heaps particular criticism on politicians, civil servants and the structure of state policy as causes of the British disease. There have been equally strong appeals to the state as the only force powerful enough to reverse decline. Before examining this literature, it is essential to grasp the different ways of measuring the pattern of public sector growth.
Alan Booth

7. The Cultural Critique

Abstract
Two of the most influential books of the 1980s on British economic performance identified a cultural malaise at the heart of contemporary society. Wiener (1981) argued that since the mid-nineteenth century Britain’s elite had been ambivalent about the ‘industrial spirit’. In his aggressively written polemic, Barnett(1986) insisted that during the Second World War postwar planning was driven by a religious revivalism towards ideas of social consensus and stability and away from the starkly obvious and frankly urgent needs of manufacturing industry. Neither book was exactly in tune with the Thatcher project, but both were seen to support the Thatcherite idea that Britain’s fundamental need was cultural regeneration. Both volumes were widely read, even at the highest reaches of government. They received only mixed reviews from professional historians but their emphasis on the power of values, beliefs and culture to shape economic decisions and performance was a valuable counter to the growing tendency of economic historians to explain actions in narrowly economistic terms. Both Barnett and Wiener were described by Edgerton (1996a, 7) as exponents of the ‘cultural history of anti-technology’, but there are good grounds for separating these terrible twins.
Alan Booth
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