Did the British Economy Grow in the 1980s?
During the nineteenth century British governments seldom thought of promoting economic growth as such. They acted on the implications of Smith’s theory as outlined in Chapter 2; intervening in the economy to maintain competition, providing a system of commercial law, struggling to ensure financial stability, and holding direct taxation — income tax — to a level barely adequate to supply public goods such as education, transport facilities and defence. In the first half of the twentieth century successive governments began to intervene in the economy ever more frequently, recognising the deficiencies inherent in a market economy and reacting to the crises of war and depression. Most of this intervention was thus of an ad hoc and empirical nature, but in 1944 each of the major political parties accepted the Coalition Government’s White Paper on Employment Policy, committing post-war Conservative and Labour governments to maintaining full employment and thus to broadly similar and necessarily consistent policies of macro-economic management.
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