Published by EH.NET (November 2001)
Alan Booth, The British Economy in the Twentieth Century. Houndsmill:
Palgrave, 2001. x + 244 pp. $65.00 (hardback), ISBN: 0-333-69841-X.
Reviewed for EH.NET by Roger Middleton, Reader in the History of Political
Economy, University of Bristol, UK.
This is the author’s second attempt in recent years to produce a textbook on
modern Britain, with the first effort being jointly authored and a social as
well as an economic history (see Glynn and Booth, 1996). That volume commanded
polite notices and some positive reviews. The British Economy in the
Twentieth Century will not be so judged, being a deeply flawed exercise.
It is not that the author (Senior Lecturer in Economic and Social History,
University of Exeter, UK) does not know his audience; rather, at heart the
problem is that Dr Booth has ambitions for a monograph promulgating a strong
version of the (deeply flawed) thesis that the British economy did not fail in
the twentieth century but only a publishing contract to produce a textbook for
the British Studies Series (the general editor of which is his Exeter
colleague, Jeremy Black). This clash between academic ambition and the
constraint of this more limited canvass was always going to cause problems,
but what actually proves decisive in why I cannot recommend this volume is the
extreme polemical style here displayed. Admittedly, some might say this is
something of a hallmark of this author. When confined to the research journals
it is bearable, if tedious, but that style should have been diluted for this
project: it is hard enough for students to develop the skills necessary to
rationally sift evidence and arrive at a mature understanding of complex
literatures without authors attempting to dazzle with the powers of their
Booth’s thesis can be simply stated: that over the course of the twentieth
century, a periodization much to be preferred to the usual post-1945
assessments, the British economy did not underperform, either relative to its
growth potential or the actual record of comparator economies who had much
more scope to grow through resource reallocation (principally, labor transfers
from low-productivity agriculture) and recovery from the physical destruction
of the Second World War. More particularly, he asserts that there is no
substantive evidence of persistent and serious failings in British
manufacturing, no decisive pathology of entrepreneurial failure in Britain,
this even during the golden age of super growth for the OECD (1950-73).
Moreover, on grounds of simple arithmetic, even if the manufacturing sector
did grow slowly it did not contribute to relative economic decline because the
UK-US manufacturing productivity gap was long-standing whilst, in any case,
Britain was increasingly a post-industrial, service-based economy. Booth thus
accuses the majority of British economic historians of conducting their
research with inappropriate tools (deriving from the economists’ convergence
literature), which keeps them focused on the supposed supply-side failings of
manufacturing, and of not heeding the logic of Broadberry’s (1997) thesis that
attention ought to be diverted to productivity performance in services if the
aggregate productivity record is to be understood and any realistic
end-of-century assessment made about the extent of relative economic decline.
He is particularly scathing about the national decline literature that emerged
in the 1970s, and whilst he is right to identify — like others before him
(especially, and more interestingly, Supple 1994 and Tomlinson, 1996) — the
emergence of an ideology of declinism, and to point out how the crisis of the
1970s was played for strategic purposes by both the political left and right,
he does miss a basic point which connects the economic performance story he
wants to tell with the economic policy story he ought to (but does not) tell:
that the alarmist literature of the 1970s contributed to the advent of
Thatcherism and thus the change in economic policy regime that resulted. Given
that most economists today concur that thirty years on the macro- and
microeconomic policy reforms that resulted — at minimum — better positioned
the British economy to compete in global markets, and given that he also
observes that British living standards in 1997 were 90-95 per cent of those in
France and Germany, as they had been in 1973, one is rather left wondering how
we got from there to here.
Whilst rightly skeptical about the strong claims made for a Thatcherite
productivity miracle (p. 189), his audience will feel disappointed that his
discussion of post-OPEC I British economic performance is very abbreviated: it
does not confront head on the big debate engendered by Solow’s (1987)
productivity paradox (‘You can see the computer age everywhere these days,
except in the productivity statistics’, upon which see Wadhwani, 2001) and,
arguably, it only skims the surface of the deindustrialization debate because
to go further might compromise the citadel of his thesis that British
manufacturing did not fail during the golden age. A real opportunity was
missed here to bring the story bang up to date, and indeed there are quite a
lot of omissions from his literature review: no recent Rowthorn on
deindustrialization, and thus no response to the fact that since OPEC I the US
economy has doubled manufacturing output whilst keeping stable the size of its
manufacturing labor force whereas in Britain manufacturing output has not
grown but the labor force has halved (for example, Rowthorn and Ramaswamy,
1997; Rowthorn, 2000). The 1996 Economic Journal symposium on
deindustrialization (Dixon et al., 1996) seems also unknown to him, as indeed
does Moore’s (1999) important study of Britain’s trade and the EU and much
recent work on the distributional consequences of growth and economic
restructuring since the 1970s (for example, Oxford Review of Economic
Policy, 12.1 (1996) which is devoted to inequality). We have then an
author with big ambitions but a less than complete grasp of the now huge
literature. One does welcome, however, the attention that Booth directs to how
the lowest decile of the income distribution in Britain did not share in
national economic growth over the last thirty years or so, but it is
extraordinary how this is decoupled from verdicts about overall economic
performance, noticeably of course manufacturing performance and the massive
labor shedding that we have already identified.
One detects also that for Booth the manufacturing and service sectors are
really quite distinct; that he has little patience for those anxious souls who
continue to hold that the latter’s fortunes depend upon the competitiveness
and critical mass of the former; that trend deterioration in Britain’s current
account balance of payments over the last fifteen years or so should not be a
cause for concern, notwithstanding that knowledge-based internationally traded
services account for only a fraction of total export earnings; and above all
that in the reindustrialization debate — not actually mentioned by him —
there might be any data of relevance to look back on British manufacturing
during the golden age. Moreover, such is the insulated nature of Booth’s
manufacturing sector that it does not seem to have occurred to him that many
of the supply-side problems he questions as applicable (or not) to
manufacturing might equally be characteristic of services, and after expending
so much time early on berating economic historians for not studying services
when he does actually come to that topic he has little to say.
But enough of these performance matters, and onwards to policy which is the
other part of the book, albeit largely contained in one chapter. Given that
this is where Booth’s major research interests lie I had high hopes of this
chapter, but was quickly disappointed. Indeed, from the first graph onwards my
doubts grew. Before proceeding to explain why, I must preface my comments by
saying that what follows might seem excessively personal, but only somebody
who has worked in depth with the British public finance data would have
detected the problems I am about to reveal. We start with Figure 6.1 (p. 163)
which is labeled ‘Public sector receipts and total public expenditure as a
proportion of GDP, UK, 1900-96′, and with the sources given as Feinstein
(1972, tables 4, 14), various issues of the Central Statistical Office’s blue
books and the latest issue of the Office for National Statistic’s Economic
Trends, annual supplement. Ignoring that the denominator (GDP) seems to
have been measured at factor cost rather than market prices (Feinstein’s table
4), thereby presenting the public sector as somewhat larger than is normal,
we highlight that no definition is given of what comprises public sector
receipts or expenditure. One might assume — as is the usual practice — that
we are looking here at general government as the numerator. But the pre-1965
source (Feinstein’s table 14) only records current transactions of central and
local government, whereas thereafter the official series are for general
government, which includes public sector capital formation and taxes on
capital. An alternative for the numerator, of general government expenditure
(and receipts) since 1900, was available but appears not to have been used
(Middleton 1996, table AI.1-AI.2). Yet, a little later (p. 166) Figure 6.3 is
offered. This is labeled ‘Total public expenditure by economic category as a
share of GDP, 1900-96′ and includes in its legend a category for capital
formation. The source given is his Figure 6.1, and yet we know that cannot be.
We might also observe that it is identical in all respects to Middleton (1996,
fig 3.3), save that the terminal date there is 1979 (there is an unpublished
paper which takes my public finance series through into the 1990s). This is
most curious. And then we have Figure 6.4 (p. 170), which, acknowledging the
same source, offers total public expenditure by functional category (as is
provided in Middleton 1996, table 3.2, again for 1900-79). Since Feinstein
(1972) never provided such a functional classification, the stated sources
cannot form the basis for these figures (a similar comment applies to
Economic Trends). This is all very strange and it does not inspire
confidence in the data construction exercises elsewhere in the book, and
perhaps importantly so in chapter 4 where interpolations (not detailed) have
been undertaken to construct long-run data on the changing structure of
employment and output.
Beyond this, chapter 6 on government and the economy is not an adequate survey
of the developing objectives and instruments of government policy, nor of
their policy impacts. It is also very insular (cf. Booth’s protestations that
good economic history must be comparative) and ducks the question of why the
1970s were particularly difficult for Britain. Booth concludes the chapter
that ‘The writ of government is much less powerful than conventionally
believed and policy failure is one of the less likely complaints of
twentieth-century Britain’ (p. 193). I wonder how many students will be
convinced. I suspect a greater number will be irritated by the polemic that
they have had to endure, whilst they may wonder why they are being served up a
thesis which is about to be severely mauled in the journals as Broadberry and
others reply to the misinterpretation of their works that Booth here
Roger Middleton’s recent books include The British Economy since 1945:
Engaging with the Debate (Palgrave, 2000) and (with Roger E. Backhouse)
Exemplary Economists: Introducing Economists of the Twentieth Century
(2 volumes, Edward Elgar, 2000).
Broadberry, S.N. (1997) The Productivity Race: British Manufacturing in
International Perspective, 1850-1990. Cambridge: Cambridge University
Dixon, H. et al. (1996) “Deindustrialisation and Britain’s Industrial
Performance since 1960,” Economic Journal, 106 (1), pp. 170-218.
Feinstein, C.H. (1972) National Income, Expenditure and Output of the
United Kingdom, 1855-1965. Cambridge: Cambridge University Press.
Glynn, S. and Booth, A.E. (1996) Modern Britain: An Economic and Social
History. London: Routledge.
Middleton, R. (1996) Government versus the Market: The Growth of the Public
Sector, Economic Management and British Economic Performance, c.1890-1979.
Cheltenham and Brookfield, VT: Edward Elgar.
Moore, L. (1999) Britain’s Trade and Economic Structure: The Impact of the
European Union. London: Routledge.
Rowthorn, R.E. (2000) “The Political Economy of Full Employment in Modern
Britain,” Oxford Bulletin of Economics and Statistics, 62 (2), pp.
Rowthorn, R.E. and Ramaswamy, R. (1997) “Deindustrialization: Causes and
Implications,” in IMF (ed.) (1997) Staff Studies for the World Economic
Outlook. Washington, DC: IMF, pp. 61-77.
Solow, R.M. (1987), “We’d Better Watch out,” New York Times, Book
Review section, 12 July, p. 36.
Supple, B.E. (1994) “Fear of Failing: Economic History and the Decline of
Britain,” Economic History Review, 47 (3), pp. 441-58.
Tomlinson, J.D. (1996) “Inventing ‘decline’: The Falling behind of the British
Economy in the Postwar Years,” Economic History Review, 49 (4), pp.
Wadhwani, S.B. (2001) “The ‘New Economy’: Myths and Realities,” Bank of
England Quarterly Bulletin, 41 (2), pp. 233-47.
|Subject(s):||Economywide Country Studies and Comparative History|
|Time Period(s):||20th Century: WWII and post-WWII|