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Prof Scott Newton 


The Political Economy of Britain since 1960 

Introduction:

This explores the successive attempts to transform the UK since 1960, into, first, a social-democratic state, secondly, a neo-liberal market economy, and thirdly, into the New Labour synthesis of those two models. The research is based on study of the problems caused for postwar British social democracy by globalization, and aims to revise and bring up to date many of the arguments developed in an earlier text, Modernization Frustrated: the politics of industrial decline in Britain since 1900 (with Dilwyn Porter: 1988). 

Project Aims:

Between 2006-2008 I was engaged full-time on ESRC-funded research into ‘The 1964-70 Labour governments and the international economy’. The focus was on the problems caused for the Wilson governments of 1964-70 by the increasing instability of the international economy at the time. The project has so far led to two major articles, in the Economic History Review and the English Historical Review (see below). The material used and conclusions drawn are also central to a new investigation, to result in a book to be published by Pearson Education in 2014, The Reinvention of Britain, 1960-2010: a political and economic history. 

The Reinvention of Britain argues that over the last half-century governments have made three distinct efforts to reshape the political economy of the United Kingdom. The argues that these were located in the growing concern in late 1950s Britain with 'decline', an anxiety brought to a head around 1960 as a result of the fallout from Suez, of the inability to construct a credible independent nuclear deterrent, and of the relatively low growth of this country compared with the leading European states (now in the EEC). The first template for modernization this project was the post-war west European state, which (following the argument of Alan Milward that after 1945 the imperative for governments in the region was to regain legitimacy in the eyes of their citizens) had been reconstructed as social/Christian Democratic states based on co-operation between the State, the Unions, Management in industry, and Farmers. All were committed to the development of new (and the renewal of old) industries, full employment, economic growth, comprehensive social services and to the construction of modern energy, transport and agricultural infrastructures. The intention was to ensure that the futures facing these nations involved rising affluence and prosperity for all. 

The British attempt to emulate this model started with Harold Macmillan in 1961, when he embraced domestic planning and decided to apply to join the EEC, and lasted through the Wilson, Heath and Wilson-Callaghan era until the end of the 1970s. During 1970s, however, the project came under great pressure as a result of external financial instability, driven by the increasing tendency of capital markets and large firms towards the internationalization of their activities, inflation (though this challenge had been contained by 1977), internal conflict (between the government and public sector unions) and from private industry (anxious about losing power to the unions and government). These pressures culminated in the political crisis faced by Labour in the winter of 1978-79, which led to the discrediting and breakdown of the first 'reinvention'. 

The second reinvention was attempted by the Conservatives after 1979 and this represented a change of direction towards the American rather then the European model. The advent of the Reagan administration in the USA emboldened a faction of free marketeers who had seized the policy-making machinery in the Conservative party, and who saw Britain's future as a an enterprise society based on the small state and committed to low inflation, the weakening of the unions, the privatisation of industry, and a foreign economic policy which promoted, in harmony with the USA, liberal political and economic values (including encouragement for what became known in the 1990s as 'globalization'). Britain was now seen as the centre of a world marching to a capitalist drumbeat, especially after the fall of Communism in 1989. Against this background, the European model lost support and was viewed as a throwback to the 'failed' social-democratic experiment. 

The third reinvention of the period 1960-2010 was New Labour's, which was based on a reaction against the social inequalities, political turbulence, economic instability and international isolation (especially in Europe) apparent at various times in the decades after 1979, and especially after 1987. New Labour sought to modernise Britain as a new kind of social democracy which harnessed to traditional Labour objectives, for example in the fields of education, health, social services, benefits and transport, the apparently successful wealth generating power of the free market, the City and globalization. It also aimed to counter what it saw as the centralization and lack of accountability in the country's constitution via House of Lords reform and devolution, while moving back to Europe, whose political economy, characterised by a mix of private and public enterprise and generous welfare states, and whose attempt to exert a liberal political influence in global affairs, was once more seen as attractive. This model fell apart in 2007-8 with the (ongoing) financial crisis. The new project is not yet clear; the era at present is one of crisis management.

Duration: Up to 2014/15 

Methods: Archival research, interviews, memoirs, diaries, secondary sources.