The debate whether the British economy declined or grew during the post war decades among scholars especially economic historians has been going on for decades. The debate began immediately with the invention of the idea of Declinism in the later decades of the nineteenth century (Tomlinson 732). The origin of Declinism idea was as a result of the untimely British response to escalating rise in the American and German competition as well as the incessant anxiety over the rising unemployment rate. The central argument was that the decline in British competitiveness in the world trade alongside the intensifying unemployment was because of the long-term decline in economic growth (Wright 41).
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The critics pose that the British economy has long been shrinking since the turn of the century and this shrinkage was accelerated by the wars. This was evidenced by the rising inflation and declining living standards. Conversely, supporters argued that the British economy had been growing domestically if not for the comparative statistics drawn from the pessimists view point (Tomlinson 734). Whichever side one takes there are pros and cons arguments in support but like any other post war economy, British economy declined.
The origin of Declinism
Indeed, there was evidence that the British economy declined after the first and second world wars. Declinism is essentially an ideology or a set of physiological principles and hypotheses that are largely supported and unquestionable. Tomlinson asserts that the fundamental postulation of Declinism is that economic performance measured by various aggregate economic indices has been lacking and that the deficiency is avoidable or can be averted (732). Hence, Declinism embraces the conviction that economic performance can only be improved when various actions are taken.
Moreover, the idea of Declinism was more pronounced during the post war Britain especially in late 50s and early 60s. During this time, the British realized that the economic prosperity, social services and general quality of life was declining behind other industrialized countries (Tomlinson 202). Thus, Declinism was largely reinvented around the notion that Britain was lagging behind in growth and living standard when compared to other developed countries. According to Cawood the notion of decline was highly politicized since the political parties of that time used decline as a tool to beat others in the then general elections (244).
Indicators of Declinism
The Second World War resulted into increased government responsibility for its citizen economic life. In other words, the government was responsible for the economic welfare of its citizens. The major concern of the government was the declining employment and deteriorating living standard. This was due to the declining economic growth. To many observers the government failed to sustain full use of the available resources as well as increase efficiency in production. Besides, the economic performance was not valued in terms of societal welfare since it was driven by parochial political ideologies (McKay 893).
During this time the gap between the economic indicators, consumer price inflation and the rate of money wage was so wide that many economic scholars at the time felt that it would take centuries to narrow to accommodative level (McKay 991). The gap between these two indicators was the measure of living standard which by extension served as an indicator of economic performance. The British government in its bid to demonstrate its commitment to control the rising inflation introduced retail price index. The price of Food and other essential products was subsidized to hold the index constant. Moreover, the British government increased the wages despite being highly sensitive to the changes in consumer price index (Tomlinson 207).
Key statistics indicators
The argument for Declinism is drawn from the measures of the British economic performance in relation to other economies. In fact, the crucial economic statistics were those that placed British economic performance in the global perspective. Before and during the world wars economic statistics were sporadic. The 1950s saw absolute statistical insurgency in both local and worldwide data comparisons. Four categories of data were seen to be of particularly essential indicators of Declinism. These included data for industrial production, national income, share of world trade and productivity (Tomlinson 738)
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The national income
The use of national income resulted from the increased sophisticated estimates particularly with the introduction of income tax. It was also driven by the augmented concern about income and wealth distribution among citizens. In Britain, the need to manage the economy using fiscal means against the rise of inflation increased the use of income data estimates. Compared with other countries the British national income estimates was still down (Wright 47).
With the increased inflations emanating because of war, the government became more concerned with deteriorating living standards. The national income statistics were not only produced by the British government but also by other bodies such as UN, OEEC of the European commission and the Nations League (Tomlinson 743). All these data showed that the British national income was not at par with other countries like Germany and U.S.
The jittering brought about by political circles evidenced the slow growth of national income. The political debate in relation to the declining living standards in 1950s originated from the indications that the British national income was declining according to UN and OEEC data (Crafts 1). However, this decline materialized when the British national income was compared with other countries. At home the national income per-caput was actually rising. Tomlinson asserts that there existed ambiguity in economic status in terms of national income (742).
Britain normally had the industrial production census at every five year interval and was published by Trade Board. A monthly index of industrial production was issued to the government for economic use. The industrial production census was used for economic comparisons especially within the U.S. Data for comparisons majorly originated from UN and OEEC. Crafts argue that the industrial production was the staple for economic comparisons in many countries and other international bodies such as UN and OEEC (1).
The use of industrial production in measuring the economic status stems from the prevailing idea that the industries are central to the economic performance. Cawood in his book argued that the rising industrial output correlates to the increased economic performance (245). Indeed the industrial growth was regarded as key to economic performance. The growth for industrial output during the post war period was below the German industrial growth. In fact, the industrial production figures during this time painted the worst picture of comparative economic growth (Crafts 1). During the 1960s, the industrial production was a major index used to measure the economic growth in many countries.
Productivity was another measure of relative economic growth during this time. Productivity was always related to industrial labor output. It is normally measured as national product per-caput. In simpler economic terms, it was the maximization of output out of total employed labor to constrained capital (Tomlinson 749). In essence, efficiency in production was largely emphasized.
As compared with other countries especially the U.S, Britain production was largely small. The British government and quasi-government agencies believed that raising economic productivity was the solution to economic problems. This was also in line with the views of the American counterparts who also believed that higher economic productivity was the solution to the world problems (Tomlinson 745).
Much of the comparative data for productivity came from OEEC which emphasized labor productivity as straight forward way of measuring economic performance. In principle, total output calculated in relation to labor inputs makes more statistical sense and at the same time takes into considerations other factors such as the efficiency (Tomlinson 746). Though it had limitations, it brought clear picture of declining economic performance as well as the living standards.
Shares of world trade
The long-term trends in British exports and the development in the world trade especially in manufacturing indicated the declining share of Britain in world trade. The implication of the decline was a mater of debate among economists. Some pointed out on the pessimistic conclusions drawn from the data while others argue that the result was from long-term decline which has been continuously taking place (Crafts 1). The share of trade was taken as a measure of British competitiveness in the world trade arena. Hence, the decline clearly indicated that Britain was loosing its international economic prowess (Cawood 246). It also signified that Britain had a big problem with its balance of payment (BOP).
The declining share of trade also designated that the British products could not compete favorably with other products in the world market. It was therefore unfavorable for Britain to depend on its exports at this time (Tomlinson 746). The decline share of trade was widespread especially over various products and markets. The reason why the declining share of trade was taken so prominently by scholars as well as the government was because of its effect on BOP.
As it was true that British economy largely declined during the post war years, the intermittent economic growth cannot be disputed. Declinism was relative not absolute as may be conceived. It involved the comparison of the domestic economy with that of other countries. The opponents pose that the British economy has long been shrinking since the turn of the century and this shrinkage was accelerated by the wars. This was evidenced by the rising inflation and declining living standards.
The argument for Declinism is drawn from the measures of the British economic performance in relation to other economies. In fact, the crucial economic statistics were those that placed British economic performance in the global perspective. Before and during the world wars economic statistics were sporadic. All the indices showed that the British economy declined in comparison to other countries especially that of Germany and USA. The declining economy affected both political and social fronts. The decline in British competitiveness in the world trade alongside the intensifying unemployment was because of the long-term decline in economic growth.
Cawood, Irene. Britain in the Twentieth Century. London, UK: Routledge, 2003. Print.
Crafts, Nellion. “British Relative Economic Decline Revisited”. 2011. Web.
McKay, Johnson, Hill, Bob and Buckler Justus. History of Western society. Back Bay, Boston: Houghton Mifflin Co., 1991. Print.
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Tomlinson, John. “The decline of the empire and the economic decline of Britain”. Twentieth Century British History 14.3(2003): 201-221. Web.
Tomlinson, John. “Inventing decline: the falling behind of the British economy in the postwar years”. Economic History Review 49.4 (1996): 731–57.
Wright, Augustine. “British Decline: Political or economic?” Parliamentary Affairs Review 40.1 (1987): 41-56. Web.