1. Historical background
Charles Dickens (1812-1870) wrote about 19th century Victorian England and documented the way in which the country saw itself and the social conflicts in a nation of imperial size and international standing. This picture of England portrayed by Dickens still fills the minds of foreign visitors. But since the beginning of the 20th century this apparently calm and contented country has been shaken up. The increasing importance of the workforce and trade unions as a political force, the beginning of the women's liberation movement (women's right to vote 1918), the emerging discussion around social problems and the questioning of the British Empire during two world wars all conspired to change fundamentally the way in which British domestic and foreign policy was seen. Post-war consensus
The war effort had resulted in a loss of two-thirds of British foreign-trade volumes and a threefold increase in the national debt by 1945. Great Britain was dependent on American financial aid the pound was losing value. A return to its previous role of world power was not an option for both political and economic reasons. Many British colonies were demanding their independence. Moreover, many previously socially deprived sections of British society were now demanding their rights. Their confidence had grown during a war which had managed to mobilize the population in way previously unknown, integrate women into the production process and establish full employment. As far as domestic policy was concerned, post-war governments initially concentrated on providing for the population, moving on later to improving living standards and on re-establishing international economic competitiveness. Despite the fact that the nation's two largest political parties, the Labour Party to the left drawing its support form the working classes and the Conservative Party to the political right, did not follow consensus-based strategies to achieve this goal, it is still fair to talk about a post-war consensus existing in British politics. The foundations of this consensus were based upon a theory by the British economist John Maynard Keynes (1883-1946) which advocated expanding the welfare state. In concrete terms this meant the development of a state-financed system of social security accessible to all citizens and state responsibility for the economy. According to this theory, the state should be more active in introducing regulations and controls aimed at influencing prices and wages, rather than just implementing economic policy in an attempt to prevent recession. The Labour Party nationalized many key areas of the economy including public utilities, airlines, public transport and the steel industry. Up until the mid eighties, the British economy was a mixed economy, that is, it was based on interplay between nationalized and private industry. By the beginning of the 70s, the British population were enjoying a marked improvement in living standards. Successive governments, however, had failed to strengthen the British economy in the face of international competition. This lack of competitiveness had led to a situation in which even key British exports to fading colonies were in decline. During the 70s Great Britain was known as the "sick man of Europe" and was suffering from the British disease". The symptoms of this "disease" included high inflation, a permanent trade deficit, wage levels that were too high (set against economic productivity), regular strikes caused by all-powerful trade unions and a general hostility toward social and economic change. The Labour governments of the 70s made several unsuccessful attempts at limiting the number of strikes and increasing the efficiency of state price and wages policy by involving the trade unions in the economic decision-making process. [Back to top of page]
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