Responding to relative decline: the creation of the National Economic Development Council

Abstract

R ecent work on Britain's economic performance has begun to adjust our understanding of the country's relative economic decline. While relative decline was apparent throughout the century after 1870, it has been argued, 'decline appears to have been at its most rapid in the years from the 1950s to the 1970s', the so-called 'golden age' of capitalism, just when British performance, measured in historic terms, was relatively good.2 Broadberry's most recent work has confirmed this view. The productivity of British labour in manufacturing, he has argued, was better than often thought, and poor productivity was largely confined to the period 1950-79.3 This poor performance could in part be explained by historical legacies but its essential causes lay in factors particular to the period after 1945.4 In seeking to explain relative decline after 1945 it has been common since the 1960s to highlight defects in Britain's institutions. This aspect has received renewed attention from economic historians with the rising popularity of 'new institutional' approaches across the social sciences.5 Thus the work of Broadberry and Crafts and other recent studies, for example by Middleton, have highlighted the importance of institutional arrangements in explaining Britain's relatively poor economic performance since 1945.6 Building on work by Middlemas, Flanagan and his coauthors, and Smith, they have placed particular stress on the detrimental effect of Britain's postwar settlement.7 It is suggested, above all, that Britain adopted a particularly non-interventionist variant of Keynesian demand management which left labour and capital relatively autonomous.