Compare and Contrast of the 1950s and 1970s UK Economy Historical writing about the British Welfare State has tended to stress the eventual triumph of collectivism over individualism. History of United Kingdom economy after 1950s is a story of linear development and progress. However, this story was put under question by the apparent reversal of the late 1970s, which began with Labour prime minister James Callaghan’s speech of 1976. In his speech, he told the Labour Party’s Conference that governments could no longer expect to spend their way out of recessions. This reversal continued with Margaret Thatcher, who sought to diminish the role of the state in terms of both public expenditure and size of bureaucracy. The period from 1947 till 1976 is called the classic Welfare State. It is considered to be more accurate to see Britain as always having had a mixed economy of welfare, rather than seeing the story of the modern Welfare State as a simple movement from individualism to collectivism.
(Crafts, N. and Woodward, N., 1991).
During the post-war years, there was a simultaneous commitment to full employment, social security that redistributed and social services in the form of education, health, and housing that were regarded as social investments. The after war period was very difficult, but later turned to be productive. The combination of war damage and a lack of human resource labour and materials created a serious urban housing problem. The Labour government wanted to pull down the slums and move their occupants out of the cities. The New Towns Act of 1946 led to the expansion of towns around London, like Harlow, to the creation of new industrial centres, like Peterlee in country Durham.
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But the new towns were still in their infant stage in 1950. Local authorities did not have enough resources to solve the problem with the housing shortage. Nearly half the population lived in private rented accommodation with little privacy or comfort. (Booth, 1995).
This situation changed promptly in the late 1950s. Britain was the most urbanised and industrialised country in the world. Regardless of economic growth, the reliance on coal for energy generation resulted in atmospheric pollution which was harmful both to people and to buildings. The London smog of 1952 lasted five days and killed more than 4,000 people from heart and lung diseases.
Environmental pollution was the price Britain paid for its industrial success. In 1950 the United Kingdom accounted for a quarter of world trade in manufactures. It is the higher proportion than before the Second World War and far greater than nowadays. This was facilitated by both the temporary dislocation of Britain’s continental rivals and the government’s policy of export production for currency reasons. Britain was the foremost world producer of ships and the leading European producer of coal, steel, cars and textiles. Science-based industries like electronics and engineering began growing promptly.
(Crafts, N. and Woodward, N., 1991).
Britain led the field in civilian aviation with the first jet liner and other more successful aircraft. Rolls Royce was a world-wide symbol of excellence in aero and motor engines. Textile industry was revived by the production of synthetic fibres like nylon. The Labour government influenced the development of the economy to an unprecedented extent. It nationalised the coal mines, the railways, the inland waterways, gas and electricity, the airways, the Bank of England and the iron and steel industry.
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By the early 1950s, state owned industries employed over two million people. Coal was still the main source of heating and energy. It provided most of the fuel for the railways. Coal production was hindered by a shortage of miners and investment. But it was twice the level of the mid-1980s and far greater than today. (Booth, 1995).
Although the great majority of British people lived and worked in urban or industrial areas, most of the land mass of Britain remained rural and agricultural. Farming was largely mixed and avoided intensive cultivation methods. Agricultural facilities replaced horses, but most farmers still employed poorly paid agricultural workers. The isolation of country life encouraged hostility to incomers and mental depression which sometimes resulted in violence. Rural areas were also at risk from bad weather. In 1952 river flooding at Lynmouth led to many deaths and in 1953 a combination of storms and a high tides. The population, which totalled about 50 million in 1950, was overwhelmingly indigenous.
The 1951 census showed that only 3 per cent of the population had been born overseas and the great majority of the immigrants were white and European. Immigrants came to Britain as refugees from the Nazis and the Second World War, including over 160,000 Poles and Jews from central Europe. The first post-war immigrants from Jamaica had arrived in Britain, on board the Empire Windrush in 1948, but there were still fewer than 140,000 blacks and Asians in Britain in 1951.Immigrants played an important part in rebuilding the post war period United Kingdom. They made input into the UK economy in 1950s. (Booth, 1995).
The British Empire of 1950s was still of great political, military and economic importance. Although India, Pakistan, Burma and Ceylon had recently been granted independence, in Africa, South-East Asia and the West Indies it was still intact, as was much of Britain’s informal empire in the Middle East. Connections with the Empire were strengthened by trade, large-scale emigration from Britain to the `white’ dominions. Princess Elizabeth was in Kenya when she succeeded to the throne in 1952 and her coronation had a strongly imperial flavour.
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Dented by the 1936 abdication crisis, the monarchy had recovered its prestige thanks to its patriotic wartime role and the dutiful conduct of the royal family. Britain, like its empire, was multi-racial and multi-cultural, for differences of nationality, locality. Both in Scotland and in Wales, local minorities demanded greater autonomy from England. In 1950, Scots Nationalists removed ‘the stone of destiny’ – a symbol of Scottish sovereignty – from Westminster Abbey, while a campaign for a Welsh Parliament attracted considerable support. (Pollard, 1994).
The 1944 Education Act had created a binary system of secondary education at `eleven plus’. Most children went to secondary modern schools which they left, at the age of fifteen, with few or no qualifications. In 1950 far fewer women were in paid employment than today.
Women were generally not expected to have proper careers, but to seek short-term employment before they married and had children. Most shops in the United Kingdom were family businesses and traditional in character. High street chains, like Sainsbury’s, were increasingly popular because they provided good quality and low prices, but self-service supermarkets in the American style were only just beginning to be introduced. The health of the nation was much better in 1950 than it had been before. Full employment ensured that people were better fed than in the 1930s, while the young actually benefited from the lack of fat during the war. The creation of the free National Health Service improved the quality of medical care.
The improvement in national health also owed much to the introduction of antibiotics which gradually eradicated many diseases, like tuberculosis, which had been major killers. (Booth, 1995).
1950 was a golden age for public transport. On the roads, one out of every three vehicles was a bus or lorry. In the cities, worn out trams were being replaced by electric trolleybuses and petrol buses, which provided cheap and frequent services. Car sales were boosted by the end of petrol rationing in 1950. But there was still only one car per sixteen people. Few families could afford a car, so a motorbike with a sidecar was a popular and cheaper alternative.
(Peden, G. 1985).
Britain, sponsored by the Labour government as a symbol of Britain’s post-war revival, which celebrated national achievements from science, manufacturing and housing, to the arts and recreation. Many people today regard post-war Britain, nostalgically, as the golden age of the Welfare State. Opinion poll evidence does suggest that in 1950 Britons were generally happier perhaps because they had more security and less stress in their personal and professional lives. Nevertheless, they were much less well off than today and many lived in mean and straightened circumstances.
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Comparing with the 50s years of reconstruction and hope in the United Kingdom economy, the 1970s can accurately be described as a decade of crisis. The economic crisis eventually was leading to a political crisis in which the country appeared to be ungovernable. In Britain, both the sense of crisis and various indicators (such as production, administrative capacity, legitimation and the means of capitalist motivation) were discernible, especially during the 1970s. The situation in the 1970s has been compared to the serious constitutional crisis of 1910-14. However, few people saw the crisis in such a serious light, even by 1979. Such a time span existed between this and the previous crisis.
Principal among these novel aspects was the increased role of the state. In 1910 state spending was approximately 13% of GDP, while in 1975 this had risen to 58%, and about 30% of the labour force in 1977 was accounted for by the public sector. Since 1910 it has all been crisis, save for those few years in the fifties when we never had it so good this type of view may prevent the isolation of the 1970s in particular as the only decade of crisis. (Pollard, 1994).
The UK experienced inflation. The state was almost bankrupt.
It required an international loan of $5 billion and the lucky case of North Sea Oil in order to prevent the economy from total collapse. The rate of overall economic growth suffered a major decline. between 1974 and 1975 the economy was actually contracting. The rate of inflation was higher than in any previous decade, especially that of 1950s, peaking in July 1975 at 26%. Only in 1983 did inflation slow to its 1970 level. All this situation combined with the highest levels of unemployment, which was experienced since the Second World War.
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It is absolutely opposite case, comparing with the 1950s, when the United Kingdom sharply needed labour force. The balance of payments deficit on visible trade continued to increase. A surplus of ?261 million in 1971 was transformed into a deficit of ?2.4 billion in 1973, forcing an emergency deflationary budget. This deficit continued to grow to around ?3.6 billion in 1974. Between 1970 and 1973, direct investment abroad trebled, suggesting that companies were voting with their feet and moving assets to more profitable locations. (Pollard, 1994).
Nevertheless, there are a number of examples which add caution to the argument that the 1970s experienced greater economic crisis than any other decade.
Other countries also suffered economic difficulties in the 1970s. What may be unique about the British case is that the severe downturn began early, during the 1960s. Economic growth suffered a more severe decline in the early 1980s than it had ever done during the 1970s, while unemployment reached more than double its 1970s peak. (Alford, 1988).
The legitimacy of any government was increasingly dependent on the productive health of the economy. Government in the 1970s was controlled by the Conservative Party from 1970 to February 1974 and the Labour Party from February 1974 to 1979.
The both parties failed, regardless of different manifesto commitments of the two governments. A government would be elected on a certain manifesto, then due to economic pressure causing a crisis of confidence in these policies, many of the manifesto commitments would be abandoned. This U-turn in policy would also fail to achieve any notable success in improving economic conditions, and the government would lose a general election. Such political situation can also be taken as a contrast to the politics of 1950s, when the gorvenment provided hope for the nation no mature how hard the living conditions were. In 1971, the working class had to take the tax burden on itself. Subsidies to council house rents were removed, and charges for medical care were increased. The unions and their members were able to resist the government, in part due to continued public sympathy for miners, railwaymen, dockers and other employees in declining industries.
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The miners unions felt that the government was weak. They demanded pay rises of between 22% and 46% per worker. (Alford, 1988).
Both Labour and Conservative governments had certain particular difficulties in governing the country. Labour governments found themselves impotent in the face of corporate control of markets, information and investment funds. Any effort to break this dominance could lead to a crisis of business confidence, which resulted in the mass outflow of funds for investment from Britain. In 1970s, Britain was vulnerable for two main reasons. Firstly, manufacturing capital was very centralised, with the largest 100 companies accounting for 50% of total output.
Secondly, it was highly internationalised: 50 of the top 100 companies were multinationals, accounting for over a quarter of all Britains visible exports. (Peden, G. 1985).
The 1970s were indeed a decade of crisis in Britain. However it would be simplistic to view these years as an entirely unique decade, suddenly thrown into crisis from an harmonious 1950s, where one could see a stable economic development. It looks like the period from 1950s to 1970s can be decribed as economic cycle, starting from enthusiastic beginning and finishing with unpredictable economic decline.
But, at the same, it can not be directly said that 1950s was the time of splendid economic development and 1970s is characterised by total economic collapse. Each period carried its own difficulties. Only, sometime, you know where and how to go; and, sometimes, you do not. The 1970s can more realistically be seen as the decade in which it became most clear that the post-war consensus was no longer viable, and that in which the extent of Britains crisis of governance became apparent. Conservative and Labour governments were forced into embarrassing policy U-turns and entirely failed to achieve their initial aims for the economy.
Alford, B. British economic performance, 1945-75, Macmillan, 1988. Booth, A. British Economic Development Since 1945, Documents in Contemporary History series of Manchester University Press, 1995.
Crafts, N. and Woodward, N. (eds.) The British economy since 1945. Oxford, Clarendon, 1991. Peden, G. British economic and social policy: from Lloyd George to Margaret Thatcher, Allan, 1985.
Pollard, A. The development of the British economy, 4th ed., Routledge, 1994..