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Changing Times: Economics, Policies and Resource Allocation in Britain since 1951

Author(s):Chick, Martin
Reviewer(s):Tomlinson, Jim

Published by EH.Net (April 2022).

Martin Chick. Changing Times: Economics, Policies and Resource Allocation in Britain since 1951. Oxford: Oxford University Press, 2020. xiii + 440 pp. £31.49 (paperback), ISBN 978019955277.

Reviewed for EH.Net by Jim Tomlinson, Professor of Economic and Social History, University of Glasgow.

 

This long-awaited addition to the Oxford University Press’s Economic and Social History of Britain series provides a powerful and intriguing account of British economic policy and performance since 1951. The author, Martin Chick, has long taught economic history at the University of Edinburgh and has published widely cited books on energy and industrial policy. This is in part a straightforward textbook, offering a comprehensive, thematic account with summaries of a wide variety of relevant literature, and a formidable array of statistics (including a statistical appendix that runs to 40 pages). But it is more than a textbook, drawing on a wide range of economic theory as well as substantial research in the National Archives to provide new arguments on often familiar topics.

The most distinctive feature of the approach taken is the focus on the temporal and, to a lesser degree, spatial dimensions of economic and economic policy change. In Chick’s view, ‘Many of the cited policy changes reflected a shift in the proportionate emphasis on different forms of time, between the present and the future, as well as a shift in the apportionment of benefits between the public and the private, and the collective and the individual’ (p. 17). This approach is linked to an evident fascination with certain types of economic theory, ranging from the highly abstract accounts of how time has been built into economic thinking in the works of theorists such as Ramsay, Allais, Hayek, Keynes and Meade to the more recent and focussed work of, for example, Kaldor, Phelps, Stern and Kay.

This attention to economic theory, much greater than is typical in general economic histories, is used to provide an account which is seen as complementary to those which emphasize neo-liberal ideas as the basis for key changes in post-war economic developments. The book does not contest the standard narrative of Britain since 1951 seeing ‘a shift to and then away from what may be crudely characterized as collective, provisionist, often monopolistic, non-market-based approaches by government to the financing, sourcing, and distribution of health, housing, education, electricity and other services’ (p. 16). But, it suggests, this needs to be supplemented by a recognition of the ‘different and changing uses made of time in the public and private allocation of resources’ (p. 17).

One area where the ‘retreat of the state’ has been unambiguous in recent decades has been that of public investment, with public sector net investment falling from a peak of 7.6 percent in the late 1960s down to close to zero by the turn of the century. The argument here links this change not only to the pressures for higher current spending on health, education and social security constrained by the political obstacles to raising taxation. This in itself has put great pressure on devoting public resources to investment, but Chick argues persuasively that this was accompanied by a shift away from emphasizing the ability of governments to fund public investment projects more cheaply than the private sector, to a focus on testing and discounting the potential benefits of such investment. This is one area where a whole new apparatus of calculation, Cost Benefit Analysis and its corollaries, grounded in particular notions of time, has profoundly shaped public policy.

Necessarily central to a book which pays so much attention to economic theory is assessing how far such theory can be seen as a prime mover in changing policy. In the case of public investment, that link seems demonstrably important, though operating, as suggested, within political constraints on the level of taxation. Environmental policy, which commendably gets a chapter to itself in this book, is another where economic arguments have been central in shaping the debate. As is discussed here in admirably lucid terms, the debate over how to respond to global warming raises profound questions about how to deal with time, echoing century-old debates within economics. In the climate change debate, how to think about the consequences of the time lag between actions taken now and the benefits accruing to future generations is central. But the issue is spatial as well as temporal, as many of the efforts aimed at containing carbon emissions will have to be taken by the rich countries, with much of the benefit accruing to the poor parts of the globe.

How far have shifts in economic theory been responsible for changes in the welfare state? One of the many illuminating (and amusing) vignettes provided by this book is of the Treasury responses to the early Institute of Economic Affairs’ attacks on the NHS in the name of consumer choice: ‘99% rubbish: however, we ought not as impartial critics to forget the 1%’ (cited, p. 193). Such ‘rubbish’ fed into the purchaser/provider split which in various institutional configurations has impacted heavily on the NHS. On the other hand, it is worth noting that the much more radical changes to healthcare (essentially, the transition to an insurance system) that the IEA advocated have made little progress.

While deploying a distinctive approach to many topics, this book is fully alert to the current concerns which aminate much of the historiography. In particular, it is very strong on inequality and poverty, which gets not only a dedicated chapter but much discussion elsewhere. Indeed, partly because of the concern with time, and its obvious links with questions of investment, there is considerable discussion about asset ownership and its profound inequalities—much greater than for income, large as the latter have become since the 1980s. And rightly there is a focus in this context on housing, where both the spread of ownership and the uneven accrual of the benefits of that ownership are arguably central to the recent political economy of inequality.

Highly innovative in many regards, the book also has features of an arguably problematic conservatism in its approach to the post-war British economy. The introduction to the book is framed by two tables on changes in GDP. These are accompanied by a footnote which tells us ‘How well such a measure captures the value of all the output in modern economy is a matter of current debate’. Some might regard that as a masterpiece of understatement! In fact, that debate has been taking place ever since the concept of GDP was invented in the inter-war years, with some of the most powerful criticism coming from the key formulators of the concept, Simon Kuznets. But the point is not just about the underplaying of the profound conceptual problems raised by using GDP to measure economic progress. Comparisons of British GDP growth underpin a whole ‘declinist’ account of modern British economic history, which suggests that Britain has suffered from profound economic debilities in the postwar period (especially in the 1950s and 1960s). Chick’s approach is not as declinist as many who write about post-war Britain (for example, Nick Crafts’ recent Forging Ahead and Falling Behind), but it does affect the argument at important points. For example, the welcome attention to Britain’s deindustrialisation is framed in declinist terms, where stereotypically the unfavourable contrast is with Germany—though the table of comparative GDP shows British GDP/head exceeding Germany’s in recent years despite this contrast.

Deindustrialisation has undoubtedly been very important in Britain’s recent economic history, but seeing its significance in terms of the possible impact on the growth of GDP may miss much of the point. As noted, though perhaps underemphasized, by this book, structural change in employment away from industry has had profound implications for poverty and income distribution, and its spatial distribution. In turn this has fed into significant changes in social security. Last but not least, the change summarised by the evocative and largely accurate phrase about what has happened to the typical job –‘from coal to care’ — is very much linked to changes in the gendered distribution of work.

 

Jim Tomlinson is Professor of Economic and Social History at the University of Glasgow, and currently has a Leverhulme Trust Major Fellowship to work on ‘Defeating Mr Churchill: The Local, the Global and the Imperial in the Decline of Liberal Political Economy, 1900-1929.’

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Subject(s):Economic Planning and Policy
Economywide Country Studies and Comparative History
Government, Law and Regulation, Public Finance
Income and Wealth
Geographic Area(s):Europe
Time Period(s):20th Century: WWII and post-WWII