Abstract
Whether the July 1966 political crisis is seen as an unnecessary end to Labour’s hopes or an overdue awakening to the realities of international economics, its causes demonstrated that five years of almost continuous discussion of modernisation had had far less impact on what managements and workforces actually did – whether their firms were private or state owned – than anyone in government and party political circles had imagined possible. From then on, the awful question about the power of government and the capacity of the state in its various forms actually to change patterns of behaviour preoccupied them all until, after almost another ten years, a contrary view began to intrude, in which it was argued that governments and states were intrinsically incapable of achieving this sort of ambition.
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Notes and References
Cf. L. Kerr et al., Beyond the Freeze: A Socialist Policy for Economic Growth (1966). This included import controls, liquidation of overseas assets and devaluation to eliminate the constraints on planning.
Cf. R. Soloman (then a senior official at the Federal Reserve), The International Monetary System (1977), p. 89.
The more the British withdrew from their undertakings, the harder the US administration pressed them to accept permanent funding of the sterling balances and a joint dollar-sterling area (C. Ponting, Breach of Promise (1989), pp. 56–7).
Susan Strange, Sterling and British Policy (1971), p. 74.
The deficit rose from $2.9b. in 1967 to S19.8b. in 1971 (E. A. Brett, The World Economy since the War (1985), p. 119, generally; see esp. Chapters 5 and 6).
Thus the judgment made by R. Bacon and W. Eltis, Britain’s Economic Problems, (1978), pp. 50–1, that 1966–67 ‘was the decisive turning point, after which the structure of the UK economy deteriorated almost without interruption’, ignores both the cumulative effect of what was achieved by 1970, and the work of the Heath Government up to 1973.
Ibid., 17 March 1968. Crossman’s complaints about Wilson’s evasiveness, lack of communication and intellectual dishonesty recur throughout these volumes; cf. also Tony Benn, Out of the Wilderness: Diaries 1963–67 (1987).
Quoted in A. Gamble and S. Walkland, The British Party System and Economic Policy 1945–83 (1985), pp. 119–20.
Cf. Wayne Parsons, The Political Economy of British Regional Policy (1988), Chapter 7.
Cf. S. Young and A. V. Lowe, Intervention in the Mixed Economy: the Evolution of Industrial Policy 1964–72 (1974), Chapters 1 and 2.
N. Vig, Science and Technology in British Politics (1968) p. 159.
Derek Senior developed the idea: ‘The City Region as an Administrative Unit’ (Political Quarterly, 1965, pp. 82–91). See Frank Stacey, British Government 1966 to 1975 (1975), Chapter 8.
Cf. Wayne Parsons, The Political Economy of British Regional Policy (1988), pp. 217–26, which is very critical of Labour Government performance.
J. Hardie, ‘Regional Policy’ in W. Beckerman et al, The Labour Government’s Economic Record (1972), pp. 218–47. The ratio between regions of highest unemployment and the average fell from 2.21 in 1964 to 1.67 by 1970.
In 1965 the Monopolies Commission (MC) was transformed into the MMC. Referrals by BOT occurred, normally, in cases where one company or two connected companies supplied 25 per cent or more of a particular product or service. MMC continued to adjudicate on the old MC principle of ‘public interest’, which meant that each case had to be settled on its merits, not in relation to a body of case law. ‘Procedure was firmly on the “cost-benefit” side of the fence, with no strong presumption in favour of competition’ (Derek Morris, The British Economy 1978, p. 456). Or, one might add, in favour of Britain’s future chances in Europe; the MMC rejected Barclays’ attempts to merge with Lloyds and Martins Banks despite the immense competitive weight that such a conglomerate would have had in Europe. A similarly designed merger of Beechams and Glaxo was also disallowed; Unilever’s merger with Allied Breweries, however, went through. (The GEC merger escaped the net altoghether, presumably because of the involvement of IRC and Min Tech.) According to D. Swann, Competition in British Industry (1974), the RTPC’s work not only reduced collusion among firms but forced them to drop large numbers of restrictive practices in the 1960s.
T. Benn, Office without Power: Diaries 1968–72 (1988). Tony Benn’s intellectual peregrination in the first half of 1970 can be read in this volume in various ways: in his disillusion with his colleagues (p. 24), and with existing political institutions (p. 262); in the development of a left-wing populism (“people vs. the elite”) pp. 249, 280) linked specifically to trades unions’ involvement in industrial policy (p. 251). It can also be seen generally in the speeches and papers set out in Appendices HI (’technology and the Quality of Life’), IV (‘Learning How to Use Power’) and V (a Fabian pamphlet ‘The New Politics: a Socialist Renaissance’). Interview 1983.
M. Posner in A. Cairncross (ed.), Britain’s Economic Prospects Reconsidered (1971), p. 165. Robert Hall, Eric Roll and Brian Reddaway concurred (ibid., p. 199).
For a discussion of some of NEDC’s detailed effects, see R. K. Middlemas, Industry, Unions and Government (1984), Chapter 8.
K. Williams, J. Williams and D. Thomas, Why are the British Bad at Manufacturing? (1983). Despite the fact that in 1968–71 it reached its production peak, British Leyland’s profitability held up only until 1971, partly because of a steep falling-off in exports (the result of failure to design a car for the European market), and partly as it lost home market share following the latest GATT round of tariff reductions. Its internal incoherence and appalling level of industrial disputes showed up in sharp contrast to the Ford Motor Company which, in furtherance of Detroit’s mid-1960s decision to internationalise, developed a new organisation and product range and a new division of labour across the whole of Western Europe. IRC could do nothing with BLMC: its Chairman, Donald Stokes, was even a member of the IRC Board. BLMC’s primary failure was to continue with volume production aimed in design terms only at home demand, while failing to cost accurately production of the Mini, the only car with a European-wide potential. From being fifth in size among manufacturers in the world in 1968, British Leyland fell out of the main league altogether by the end of the 1970s.
R. Jones and O. Marriott Anatomy of a Merger (1980), and K. Williams, J. Williams and Thomas, Why are the British Bad at Manufacturing? The merger bid itself was highly geared to GEC’s short-term profitability and high stock market quotations, to the detriment of long-term investors. The savings which undoubtedly occurred afterwards came from thirty plant closures (reductions in surplus capacity of an overblown industry) as much as new developments in television and telecommunications; and output, especially exports, rose more slowly than had been expected.
The test discount rate was set first at 8 per cent, then in 1969 at 10 per cent. Derek Morris, The British Economy pp. 500–6. Also J. Redwood, Public Enterprise in Crisis (1980), pp. 25–30.
Cf. E. Wigham, The Power to Manage (1974), p. 227.
The most that can be said for government policy in the 1960s is that it encouraged the very largest firms, (ICI but not Courtaulds), to buy up and create virtually integrated concerns, which salvaged something for the future: J. Singleton, ‘Lancashire’s last stand’, Economic History Review, 1986, pp. 92–107; William Lazonick, ‘Industrial organisation and technical change’, Business History Review, 48 (1983), p. 196.
Wyn Grant and D. Marsh, The Confederation of British Industry (1977).
Cf. L. Tivey The Politics of the Firm (1978),
and A. Cawson, Organised Interests and the State (1985). Whereas the hundred largest manufacturing firms accounted for 20 per cent of total production in 1953, by 1970 their share had risen to 40 per cent (S. G. Prais, The Evolution of the Giant Firm in Britain, 1976), p. 5).
CPRS, The Future of the British Car Industry (1975).
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© 1990 Keith Middlemas
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Middlemas, K. (1990). Acting out the Plan. In: Power, Competition and the State. Palgrave Macmillan, London. https://doi.org/10.1057/9780230378780_6
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