Great Britain:
Political Economy
I. The Question of British
Decline
II. Collectivism to
Thatcherism
III. A Liberal Market
Economy
IV. A Global Leader?
I. The Question of British Decline
z Geopolitical
–
Wars and Loss of Empire
z Economic
–
–
Decline
Decline
Catch-Up (pre-1945)
Relative Decline (post-1945)
UK per capita Income,
1960-1999
UK Growth Rates, 195098
II. Collectivism to Thatcherism
Roots of the Collectivist Consensus
z The ‘Mixed Economy’
z Weaknesses of the Mixed Economy
z
–
–
–
z
Lack of Productive Reorganization
Conflictual Labor Relations
Increasing Cost to State
OVERALL PROBLEM: Focus on
distribution rather than production
Mixed
Economy
for the
People
II. Collectivism to Thatcherism
z
Elements of Thatcherism
–
–
–
–
–
z
Monetarism
Privatization
Deregulation
Reduce state spending
Reduce trade union power
Broad Goals
–
–
Move to more free market system
Establish an ‘enterprise culture’ in Britain
Index of Economic Freedom
Economic Freedom Score
9
8.5
8
7.5
7
6.5
6
5.5
5
1980
Source: Fraser Institute
1985
1990
UK
Germany
Japan
1995
US
Italy
2000
2003
France
Canada
Britain as a ‘Liberal Market Economy’
z
Role of the State
–
z
z
Pro-Market Ethic
and Policies
–
Capital (Business)
–
–
Segmented and
Equity Financed
(Confederation of
British Industry
-- CBI)
Labor
–
z
Craft-based,
Segmented and
Conflictual
(Trades Union
Congress -- TUC)
Culture
–
–
Individualist and
Pro-Capitalism
Class relations and
Egalitarianism
IV. Britain as a Global Leader?
G-7 Economic Performance, 1995-2005
GDP Growth (1)
GDP per capita (2)
Unemployment (3)
Canada
3.3%
114
8.1%
France
2.2%
107
10.1%
Germany
1.4%
103
8.4%
Italy
1.5%
100
10.0%
Japan
1.3%
107
4.4%
United Kingdom
2.8%
113
6.0%
United States
3.3%
144
5.1%
(1) Average % Change in real GDP, 1990-2000.
(2) GDP at PPP (OECD =100), 2004.
(3) Average Standardized Unemployment Rates, 1995-2004
Source: OECD.
IV. Britain as a Global Leader?
Foreign Direct Investment (% of GDP)
6
Percentage
5
4
3
2
1
0
-1
1994
Sou r ce: O ECD
1995
1996
UK
Germany
Japan
1997
1998
US
Italy
1999
France
Canada
IV. Britain as a Global Leader?
Comparative Productivity
(GDP per person employed)
100
95
US = 100
90
85
80
75
70
65
60
1980
1985
1990
Source: US Bureau of L abor Statistics
1995
2000
2004
UK
Germany*
France
Italy
Japan
Canada