Where Britain Went Wrong

Abstract

Those who seek to manage economies or advise on their management are either tinkerers or structuralists. Tinkerers believe that a country’s economic ills can be cured by adjusting demand, the exchange rate or the money supply, and by persuading workers to accept periods of wage restraint. Structuralists are concerned with the underlying structure of economies, and believe that tinkering about will not suffice where this is out of line. Treasury civil servants are generally tinkerers, and they usually seek to put things right by adjusting what they actually control. Many politicians are also tinkerers, and indeed in many economies minor adjustments to this and that are all that is needed to produce highly satisfactory results. In these economies — West Germany, Japan and recently France are examples — the underlying structure has been such in the past fifteen years that government control of effective demand, the money supply and the exchange rate were really all that was needed to produce an economic environment where businessmen and workers could co-operate to increase wealth and real incomes at very rapid rates.