Transcript Slide 1
Key words: Keynesianism Stop Go Saturday, July 18, 2015 How successful were the Conservatives in developing the British economy? To understand the definition of key economic terms To explain the economic success and failures of the Conservatives between 1951-1964 To make a judgement on this success Key Terms Work in pairs and discuss and write a definition in pencil of these key terms. • Balance of Payments • Relative Decline • Affluence • Consumerism • Keynesianism • ‘Stop Go’ Key Terms • Balance of Payments - Equilibrium between cost of imports and the profits from exports, when import cost outweighs export profit, financial crisis ensues • Relative Decline - Decline in living standards and economy by comparison with other nations, such as USA, Germany. Not necessarily a decline when not compared with other nations • Affluence - Increase in ownership of consumer goods and wages earned. More wealth • Consumerism - Consuming of popular goods, TVs, cars etc. Attempts made to try and increase consumption of materials produced • Keynesianism - Late 1940s-1970s economic theory. More government input in raising capital to ensure that demand did not fall, so consumption of goods was maintained. High wages = high demand. Potential short term deficit for long term prosperity • ‘Stop Go’ – defines period of economic growth and inflation (where wages exceed prices) followed by periods of economic slowdown and deflation (where wages do not keep up with increased prices) Conservative economy Churchill WHEN YOU FINISH EDEN: Why was Economic success there a “Post War Consensus in Economic failures/limitations Britain”? Key Figure: Harold MacMillan – what Eden do we know? Economic success Economic failures/limitations https://www.youtube.com/watch?v=Kl1vn8IF9 h8&safe=active HISTORIOGRAPHY ON THE ECONOMY • In 1964 General Election Labour described them as part of “Thirteen Wasted Years” • In 1964 General Election Conservatives saw period as one of “unprecedented economic growth” • Economist J.K.Galbraith in “The Affluent Society” (1958) saw period as one of significant success – problem with this? • Pollard argued that policy of “stop-go” encouraged imports at expense of exports creating relative economic decline • Matthews (1969) argues that “Stop Go” was growth-inhibiting • Glynn and Booth held that reasons for economic problems were poor management with a lack of skill and vision • Elliott & Atkinson argued that many businessmen especially of small and medium size enterprises were reactionary • Bogdanor & Skidelsky have argued that there was a degree of consensus between parties at the time. How successful were Conservative economic policies between 1951-1964? “Golden Age” Consider: • Consumer goods • Employment • Industry • Government policy • Foreign trade etc “13 wasted years” Candidates should be aware that the Labour Party’s election campaign in 1964, under the theme ‘Thirteen Wasted Years’, was basically a condemnation of the Conservatives’ record in general, and particularly the ‘stop-go’ policies which highlighted their inability to produce sustained growth. Since 1964 it has become almost the conventional wisdom that affluence was temporary and built on fortuitous circumstances and, that from 1955, Britain was bedevilled by a series of sterling crises which held back the economy. Clearly the success of the Conservative administration in the 1950s rested upon the material conditions of the period. How successful were Conservative economic policies between 19511964? “Golden Age” Hennessey – Golden Age! • Golden age did exist and progress was made • Living standards rose steadily • Rate of economic growth was consistently higher than it had been between 1900-1939 • Unemployment 2% • Year by year, more prosperous and equal • Comparisons with other countries misleading – Germany and Japan had no choice in completing restructuring their economy and infrastructure and had not been allowed to spend on defence (Britain spent 7% of GDP on this) “13 wasted years” Barnett – 13 wasted years! • 1970’s inevitable culmination of long term economic decline • Failed to control spending or face down wage demands from unions • British industry failed to modernise • Britain’s world trade – ¼ 1951 to 1/10th 1975 • Technical education neglected • Low productivity vs. US, Japan and W. Germany • Nationalisation a mistake • Too much emphasis on full employment which had led to problems with inflation ‘Well, gentlemen, I think we all fought a good fight’(The Spectator, 16 October 1959)