Britain’s Economic Miracle: Myth or Reality?

Citation

Rowley, C. (1998), "Britain’s Economic Miracle: Myth or Reality?", International Journal of Manpower, Vol. 19 No. 3, pp. 209-211. https://doi.org/10.1108/ijm.1998.19.3.209.7

This is yet another book assessing changes in economic policy and their impact during the 1980s and early 1990s. This is hardly a new idea and this text itself is mainly composed of a collection of previously published (albeit “up‐dated”) journal articles. Is this an example of the power of the “publish or perish” ethos now common throughout academia?

The book has two parts. The first covers macroeconomic issues, such as growth, productivity, inflation, unemployment, balance of payments, with assessments ranging from pessimistic to more upbeat. The second part outlines micro issues, such as privatization, taxation, regional issues. An introduction provides a background and theoretical basis of policy models. In short, it presents a now well‐rehearsed thesis ‐ that during the 1980s government dramatically changed policy. The tenets of Keynesianism, the once unchallenged orthodoxy, were overturned as privatization, deregulation and market liberalization replaced prices and incomes controls and state intervention and targets ‐ first of the money supply, then the exchange rate.

This book has several drawbacks. Not only is there no concluding chapter to bring the text together, but there is also a large amount of repetition, especially in the first part, with its constant sifting through of the same events, data and sources (which are also often secondary). A major problem with the text is rooted in its simplistic portrayal of historical and political dichotomies. For example, the argument that the post‐war consensus ended in 1979 can be questioned on two levels. First, challenges to the consensus were not new and the lexicon of monetarism had already developed. This was not only by, for example, Labour in 1976 or the Tories in 1970, but also by Labour in 1968 with ideas of using the money supply to beat inflation rather than unemployment, and also the resignation of the Conservative Treasury team in 1958 after proposals for a monetary squeeze were rejected. A second level is in the implementation and policy level. The idea of a monetarist coup needs qualification. Monetarist political hegemony in government was a chimera until at least after 1983, and the assumption that people knew what monetarism was, and that it was coherent and consistent, can also be questioned. Not only were some policy changes introduced before (the sale of council houses, abandonment of full employment), others remained (incomes control, such as cash limits and norms), and some were originally little emphasized and only became important over time. The 1979 election manifesto and early policy were not radical or coherent because Conservatives had no real idea about what to do (other than avoid Heath’s mistakes). Few in the party understood monetarism (itself a diverse set of several schools). Policy was not coherent; for example, soon monetarist targets took second place to exchange and interest rates, back to the familiar model of monetary policy of the 1950s and 1960s. In short, government was seeking autonomy to pursue its own interests and traditional Tory party statecraft, the idea of power and winning elections taking overriding priority over perceived addictions to policies or ideologies. In sum, post‐1979 continuity had in some respects been greater than it is often politic to admit.

More specific difficulties with the text concern the narrowness and simplicity of some of the work. This can be seen in the following examples. It argues that the impact of changes on macroeconomic policy is “certain to endure” (pxiv) and EMS membership obliges governments to continue policies. Yet, political choices and the departure from the ERM shows the folly of such determinism! Another example is in chapter 3, which argues that the car industry was virtually destroyed by “anarchic industrial relations and frequent strike action” (p. 62). This ignores factors such as poor management, company structures, lack of product rationalizations and poor design. It also argues that improved technology, made possible by better industrial relations, was important. Yet, both older (Hilton et al., 1935) and newer (Christie et al., 1990; Daniel, 1987) research argues that employees were not opposed to technological change. Restrictions on technology often come from factors ranging from failure to work out a strategy or appropriate organizational structure for innovation (Child, 1987) to poor management and lack of technical skills. Similarly, the argument that manufacturers, having conceded mass markets for standardized commodities, concentrated on smaller, more specialized activities is problematic. Some research points to a different scenario: many firms cannot follow such niche strategies as they have poorly educated and trained workforces and lack skills in areas such as R&D and marketing. The chapter on trade unions is particularly weak and naïve. For instance, it takes as a manifestation of union power the ability to take strikes, but it does not discuss the complexities involved (such as with the data, other forms of action, costs involved that result in savings for employers, and differences between sectors).

However, despite these caveats this text could be used as a source of details on economic policies and changes. As such it can be used as a resource by students. However, whether academics will want to accord this book any greater status is problematic given its underlying weaknesses of repetition, simplicity and shortage of analysis in some chapters.